Children Under the Age of 18 (Minors)
A parent (or other person leaving a gift to a child) who wants to delay payment of the inheritance beyond the age of 18 must include a trust in his or her Will. Otherwise, the inheritance will be handed over to the child at age 18. If a trust holds the child’s inheritance, a parent can specify how much the child receives and when. The terms of a trust spell out what the trustee can do or not do with the trust assets. For example, the terms of a child’s trust might include:
- payment at any time in any amounts for education, care and support,
- payment of all trust income to the child once he or she is 18 or older,
- payment of the capital of the trust in lump sums at various ages. (Capital is what the trust started with plus any income that has not been paid.) Typical sums and ages might include:
- pay 5% at age 18,
- pay 20% at age 25,
- pay the balance of the trust at age 30.
Establishing a trust can ensure that there are funds available to meet a child’s needs before the child is financially self-sufficient and, at the same time, protect the child from receiving a large inheritance before he or she is ready to handle it.
A Henson Trust
A special kind of trust, known as a Henson Trust, is often used to provide financial assistance for a person with a disability while also protecting the person’s governmental benefits, such as Ontario Disability Support Plan (“ODSP”) benefits. Henson Trusts are sometimes referred to ‘Discretionary Trusts’ or ‘Disability Trusts’.
To qualify as a Henson Trust, it must be drafted such that assets are not available to the person with a disability except at the discretion of the Trustee.
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Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.