What Is a Henson Trust and Why Is it Important?

A Henson Trust is a legal tool designed to ensure the financial well-being of individuals with disabilities. It is named after the landmark case Ontario (Ministry of Community and Social Services, Income Maintenance Branch) v Henson [1]. The trust is an absolute discretionary trust, typically established for a beneficiary who is receiving support through the Ontario Disability Support Program (ODSP). Since funds from a Henson Trust are exempt from ODSP eligibility calculations, beneficiaries can receive financial assistance without jeopardizing their entitlement to government support.

ODSP benefits are calculated based on an individual’s means and income. Without proper estate planning, an inheritance or financial windfall could reduce or completely disqualify a person with a disability from government assistance. A Henson Trust prevents this issue by granting absolute discretion to a trustee, who manages the trust assets and distributes funds for the beneficiary’s needs. These distributions may cover housing, education, medical expenses, and recreational activities, as long as they serve the best interests of the beneficiary.

A crucial feature of a Henson Trust is that the beneficiary has no legal claim over the trust assets. The trustee maintains full control over how and when funds are distributed. Since a Henson Trust does not last forever, careful consideration must be given to contingent beneficiaries—those who will inherit the remaining funds after the primary beneficiary’s death or the trust’s termination.

By appointing a responsible trustee, the settlor of the trust ensures sustainable financial management for the disabled beneficiary. An ideal trustee should be familiar with the beneficiary’s personal needs and circumstances, ensuring that distributions align with their best interests while preserving ODSP eligibility.

A well-managed Henson Trust allows individuals with disabilities to build a financial legacy that supports them throughout their lifetime and possibly benefits future generations. It can also be created within a will to safeguard assets for a disabled beneficiary after the testator’s passing.

Establishing a Henson Trust requires legal expertise. Engaging a knowledgeable estate planning lawyer ensures the trust is properly structured and adheres to applicable laws. The right legal partner will provide tailored solutions to protect government benefits, secure financial stability, and promote greater independence for disabled beneficiaries.

[1][1989] CarswellOnt 542.