Community Living Windsor

An Absolute Discretionary Trust, also known as a "Henson Trust", is way to provide ongoing supplementary financial support from the family’s resources without jeopardizing the disabled individual’s right to receive ODSP income support.

The primary distinguishing feature of an absolute discretionary trust is that the trustees have complete freedom (in Mr. Henson’s words, “absolute and unfettered discretion”) to use the money as they see fit, or even to retain it in the trust, so long as it is used for no other purpose than to benefit the person who has a disability. The courts saw this as effectively ensuring that the only amount of the trust money that belonged to the beneficiary was any amount actually paid to her or on her behalf from time to time. Otherwise, it was the property of the trust, and therefore was not available for the “maintenance” of the beneficiary. In other words, such a bequest was in reality not an “exempt” asset, but an asset that did not belong to Mr. Henson’s daughter in the first place.

Obviously, anyone creating a Henson trust will want to exercise a great deal of care in selecting trustees whose concern for the well-being of the beneficiary is beyond question. The terms of the trust should include a wish that the trustees will exercise their discretion in a manner that will maximize the beneficiary’s entitlement to receive money from other sources, such as the government’s social assistance program. It must be remembered, however, that the trustees of an “absolute discretionary trust” are free to exercise their discretion as they see fit (so long as they do not use the money for anything other than the benefit of the named beneficiary or beneficiaries), regardless of any wishes expressed in the will.

A Henson trust is an extremely important way to provide ongoing supplementary financial support from the family’s resources without jeopardizing the individual’s right to receive ODSP income support. Unlike the trusts described on the ODSP website under “exempt assets” (which can be referred to as “government-regulated trusts”), there is no upper limit on the amount of a Henson trust. The amount of the trust should be calculated bearing in mind the present and possible future limits on the amount of gift income an ODSP recipient can receive. If the trust were to produce substantially more income than the current $5,000 ceiling on gifts in any 12-month period, the excess income would probably be retained in the trust or given to another beneficiary. The will can and should name another person or persons, or possibly a charitable organization, to receive the excess income and also the remaining funds in the trust, if any, when the principal beneficiary dies. These alternate beneficiaries may also be designated to receive the excess income in the event of the application of any law limiting the extent to which income can be retained by the trust.

Speak to your lawyer about including a Henson trust in your will. Actually, this type of trust can be created while you are still living. Sometimes people do it that way and name themselves and one or two others as trustees. This makes it possible for the trust to be used for the benefit of the family member while the parents are still living, including while they may themselves have a disability that would prevent them from dealing with their own money. This can also be done by using a power of attorney for property. Any parent, when making a will, should also ask their lawyer’s advice about powers of attorney for both their property and their own personal care.