Can you garnish a Henson Trust for child support?

October 2, 2017 Doreen So Continuing Legal Education, Estate & Trust, Estate Planning, Ethical Issues, Executors and Trustees, General Interest, Trustees, Uncategorized Tags: , , , , , , , 0 Comments

The answer is no according to Borges v. Santos, 2017 ONCJ 651.

In Borges v. Santos, a garnishment proceeding was commenced by Maria, who was entitled to child support from Antonio.  Maria sought to garnish a trust that was established from the Estate of Antonio’s mother.  Pursuant to the Will of Antonio’s mother, the Trustees were given an absolute and unfettered discretion to pay any part of income or capital for Antonio’s benefit and to keep Antonio’s comfort and well-being in mind in exercising their discretion.  In this case, the Trustees also happened to be Antonio’s brother and sister as well as the gift-over beneficiaries of this Trust such that they will be entitled to all income and capital that were not distributed to Antonio 21 years after their mother’s death.

In one of her arguments, Maria contended that the Trust was not truly discretionary because of the non-arm’s length relationship between the Trustees and Antonio since they were siblings.  The Court in case clarified that Tremblay v. Tremblay, 2016 ONSC 588, “does not stand for the proposition that all familial relationships between trustees and beneficiaries automatically demonstrate that the trust is under the control and hence the property of the beneficiary” for the purposes of the Family Law Act.

Interestingly, Antonio gave evidence in this proceeding that he wanted the Trustees to honour his child support obligations to Maria, although they chose not to comply with his wishes.  Ultimately, as obiter, the Court also asked the Trustees to consider making a distribution to Antonio for his comfort and well-being by supporting his son, Christopher, while acknowledging that he could not order them to do so.

For those of you who are interested in the essential elements of a Henson Trust, click here, for a previous blog on this topic by Ian Hull.

Thanks for reading!

Doreen So

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