Who Needs a Henson Trust (for disabled children / beneficiaries)?

Neufeld Legal | Calgary, Alberta wills and estate planning lawyer, advising clients in developing and implementing their personal succession plans.

Contact Neufeld Legal PC at 403-400-4092 or Chris@NeufeldLegal.com

A Henson Trust is an estate planning strategy that is utilized to provide financially for a person with an ongoing physical or mental disability, whether during your lifetime or after your death, given the planning considerations that must be taken to ensure that the person’s entitlement to Alberta disability related income support and other benefits are not inadvertently jeopardized. Alberta's disability related income support programs and benefits (e.g., AISH - Assured Income for the Severely Handicapped) are income and asset tested, meaning that individuals cannot own certain assets or earn or receive income in excess of specified amounts. If these income and asset thresholds are exceeded, the person may be disqualified or ineligible to receive income support and other benefits until the excess assets are depleted, hence the need for appropriate legal planning arrangements, such as a Henson Trust.

A Henson Trust is a trust (most frequently forming part of a parent's or grandparent's Will) that provides the trustees with the absolute discretion to distribute income and capital from the trust to the beneficiary as they see fit. The trustees have full control as to when, if and how much income or capital is to be paid to the beneficiary. The beneficiary of a Henson Trust has no vested interest in the income or capital of the trust. This means that they cannot claim or demand payments from the trust and, consequently, they are not considered to own the trust assets. Henson Trusts are subject to provincial legislation and regulations.

A Henson Trust can be set up as an inter vivos trust (established during your lifetime) or as a testamentary trust (established on death under the terms of your Will). A Henson Trust must be planned in advance as it cannot be settled by the beneficiary. There is no limit on the amount of assets that can be settled into or contributed to a Henson Trust. There may, however, be limits with regards to the distributions that can be made from a Henson Trust to the disabled beneficiary without affecting the beneficiary’s eligibility for income support and benefits. The usefulness of a Henson Trust may therefore be limited by provincial regulations which restrict the distributions that a beneficiary can receive from a Henson Trust without impacting the beneficiary’s income support.

Contact our law firm today to learn how our legal team can help you plan for the future (e.g., wills, trusts, estate planning) or deal with the legal demands associated with the passing of a loved one, including situations where you are looking to appropriately plan for a child or grandchild with an ongoing physical or mental disability (and protecting their government disability related income support and other benefits). Contact our law firm at 403-400-4092 or Chris@NeufeldLegal.com to schedule a confidential initial consultation.

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