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1
Discretionary control:
The trustee(s) have full discretion over the distribution of income and/or capital from the trust to the beneficiary, ensuring that the beneficiary does not have a vested right to the assets.
2
Asset protection:
By placing the assets in a trust, the assets are protected from creditors and potential misuse by the beneficiary or others.
3
Continuation of government benefits:
The trust structure allows the beneficiary to maintain their eligibility for means-tested government benefits and assistance programs, as the trust assets are not considered as part of the beneficiary's financial resources.
4
Flexible structure:
The trust can be tailored to accommodate the unique needs and circumstances of the beneficiary, including provisions for the appointment of successor trustees and the management of the trust assets after the beneficiary's death.
A Henson Trust, also known as a discretionary trust, is a specific type of trust designed to protect the assets of individuals with disabilities while maintaining their eligibility for government benefits and assistance programs. The trust is named after the 1989 Canadian court case, The Minister of Community and Social Services v. Henson, in which the court upheld the validity of this type of trust arrangement.
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In a Henson Trust, assets are placed under the control of a trustee or trustees, who have full discretion over the distribution of funds to the beneficiary with a disability. Since the beneficiary has no direct control or entitlement to the trust assets, the funds in the trust are not considered as the beneficiary's assets when determining eligibility for means-tested government benefits, such as disability support or income assistance.
Key features of a Henson Trust include:
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