What is a Henson Trust?
The Henson trust is often used in estate planning to deal with situations where there is a disabled beneficiary who is entitled to receive support payments from the Ontario Disability Support Program (ODSP).
There are three essential elements of a Henson Trust. They are: (i) that the trustee must have absolute discretion, (ii) that the assets of the trust do not vest in the beneficiary, and (iii) that there is a gift-over following the death of the beneficiary.
Due to the fact that a Henson Trust beneficiary has no vested interest in the assets, nor any right to demand that the trustee pay them from the trust, the beneficial interest in a Henson trust isn’t taken into account in determining an individual’s assets. As such, the beneficiary is not required to treat the trust assets as his or her own. Consequently, the Henson trust provides a method of providing much needed additional income to a disabled beneficiary without causing them to become ineligible for ODSP.
If you are planning to provide financially for a person with an ongoing physical or mental disability, either during your lifetime or after your death, a Henson trust can preserve a beneficiary’s entitlement to government income support and other benefits, without inadvertently compromising them. It is important to understand the intricacies of these trusts, various benefits available to disabled persons, and the best way to structure trusts in the event that more than one person plans to leave funds in a Henson Trust.
If you would like to learn more about a Henson trust or need assistance with disability planning and incapacity planning, we can help.
We all want control of the most important matters. Whether it is control of our own finances and property, or that of a loved one after we pass, we help you use the legal tools available to assist you craft your own solutions for your future security and for that of your loved ones.