Any time that you are dealing with any type of trust, it will be managed by a trustee. Serving in this role means that there are legal obligations. If they are not met, the trustee can open themselves up to a lawsuit. This is no different for a trustee of a Henson Trust. Here are some of the legal obligations and responsibilities that a Henson Trust trustee has.
Know ODSP Rules:
Any mistake can put the beneficiary’s public benefits at risk. Therefore, it is important to be well-versed in all ODSP rules that could impact the operation of the Henson Trust. A loss of ODSP benefits could mean permanent removal from the program, which defeats the purpose of the Henson Trust. Some important rules to know include those related to income and asset limits that ODSP imposes on benefit recipients.
A trustee should periodically review ODSP rules to ensure familiarity. In addition, they should check for updates to the rules because these regulations can change. An Ottawa legal guardianship and disability planning attorney can help the trustee by both educating them on the applicable rules and keeping them informed of relevant rule changes.
Get Advice From Professionals:
While the trustee has been selected because they are prudent, responsible, and capable of serving in their role, not everyone is expected to be an expert in all the workings of Henson Trusts. Therefore, it is essential to rely on the advice of experts. When in doubt, the trustee is better off getting help than trying to figure things out on their own. The trustee has an obligation to act in good faith and relying on experts is one way to show that the trustee upheld their obligation.
Manage the Assets of the Trust:
One of the major duties of the trustee is to invest the assets of the fund. The trustee has a fiduciary duty to act on behalf of the trust. This means that the trustee avoids conflicts and only makes investments in accordance with the instructions set out in the trust document. Usually, the trustee will work with an investment professional. There are numerous investment advisors throughout Canada that specialize in managing trust assets.
However, that is not an absolute requirement of a Henson Trust. Nonetheless, the trustee is normally on the safest ground when they get the advice of an investment professional. Their fees may be paid from trust assets. If the trustee is making investment decisions on their own, they should be prepared to justify and defend their choices as being allowed by the trust instrument.
Keep the Records in Proper Order:
While the Supreme Court of Canada has specifically ruled on the legality of Henson Trusts, there are still various legal rules that apply and agencies that seek to enforce rules. The Henson Trust is subject to audit from several Canadian Government agencies.
First, the Public Guardian and Trustee may decide to review the records of fa trust in response to a complaint about how the trust is being managed. This can come from a beneficiary, care worker, or relative. In addition, the Canada Revenue Agency may review the records of the Henson Trust.
Accordingly, the trustee has a duty to maintain the records of the trust. This includes tax, accounting, and investment records. Audits can be difficult but keeping good records can help show the auditors that the Henson Trust is being properly managed.
Records should also be kept because the trustee has an obligation to provide information upon request to the beneficiary or family members. When the trust beneficiary is a capable adult over 18, they have the legal right to receive information from the trustee, who should be able to provide the accounting records upon request.
File Tax Returns:
The trustee has the legal responsibility to file tax returns on behalf of the trust since Henson Trusts are obligated to pay taxes. Working with an accountant, the trustee needs to ensure that taxes are paid shortly after the December 31 end of the tax year. Henson Trusts are subject to the top tax rates. The trustee does not need to pay an accountant out of their own pocket. Tax preparation fees may be taken from the assets of the trust.
Work with a Knowledgeable Attorney:
As you can see, the trustee has numerous responsibilities, and the laws may be complicated. Legal advice is a must to preserve ODSP benefits. Otherwise, a simple mistake could defeat the whole purpose of the trust. Hiring an attorney who is experienced in issues of legal guardianship and disability estate planning will help you establish and maintain a trust that meets your goals. While trustees should be experienced and educated about the workings of a Henson Trust, an attorney can help ensure that they meet their fiduciary obligations.