A Henson trust is an absolute discretionary trust used in Canada to hold an inheritance for a person with a disability. Because the trustee has full discretion over payments and the beneficiary has no vested right to the funds, the trust assets are not counted against provincial disability benefit asset limits such as ODSP or AISH.
Will an inheritance stop ODSP benefits?
A direct inheritance that pushes a beneficiary above ODSP's asset limit (currently $40,000 for a single person) can suspend benefits until the money is spent down. Placing the inheritance in a properly drafted Henson trust avoids this because the trust assets are not the beneficiary's countable assets.
Is there a limit on how much a Henson trust can hold?
A Henson trust itself has no dollar cap on the capital it can hold, because the assets are not counted against the beneficiary. This is its key advantage over a Qualified Disability Trust or the $100,000 inheritance-trust exemption, which have limits. Discretionary distributions may still affect benefits and should be planned carefully.
Who should be the trustee of a Henson trust?
Choose a trustee who is trustworthy, financially responsible, and willing to exercise ongoing discretion, often a sibling, trusted friend, or a trust company. Because payments are fully discretionary, the trustee's judgment directly protects the beneficiary's benefits, so continuity and good record-keeping matter.