What is a Henson trust?
A Henson trust is a fully discretionary trust, usually set up in a parent's will, that holds an inheritance for a child with a disability. Because the trustee has absolute discretion and the beneficiary cannot demand payments, trust assets are generally exempt when ODSP eligibility is calculated.
Every parent I talk to wants to leave something behind for their child, a gift that adds comfort, choice, and security. For parents of a child with a disability, though, a well meant inheritance can create a painful problem. If money lands directly in that child's hands, it can push them over the asset limits for the benefits they rely on every month. The good news is that Ontario families have a planning tool built for exactly this situation: a Henson trust. Once you understand how it works, that worry often turns into real relief.
What is a Henson trust?
A Henson trust is a fully discretionary trust, most often set up in a parent's will for a child with a disability. Instead of leaving money or property directly to your child, you leave it to the trust. A trustee you choose manages those assets for your child, the beneficiary, and decides whether to pay anything out, when, and how much. Your child does not control the trust and cannot demand money from it.
That may sound like a small legal detail. It is not. Absolute discretion in the hands of the trustee is the entire engine of a Henson trust, and it is why the trust has to be drafted with real care.
Where the name comes from
The name comes from an Ontario court case, Henson v Ontario. Leonard Henson set up a trust in his will for his daughter, who received Ontario benefits. The province argued the trust should count as her asset. The court disagreed: the trustee had complete discretion, and she had no legal right to force a payment or treat the trust like a bank account.
That decision is the foundation Ontario families and lawyers still build on today. Say it clearly, though: this is an Ontario concept. Not every province treats trusts the same way, so families elsewhere should check their own province's rules with a lawyer who knows them.
Why discretion is the whole point
Here is the key idea in plain English. Because the beneficiary does not legally own the trust assets and cannot compel the trustee to pay anything out, assets held in a properly structured Henson trust are generally exempt when Ontario Disability Support Program eligibility is calculated. Generally is an important word. This is educational information, not legal advice, and your family's details matter a great deal.
In practice, a parent can leave an inheritance to the trust without it automatically counting against their child on day one. That is the heartbreaking scenario this trust exists to prevent: a family doing everything right, and an inheritance accidentally cutting off the benefits their loved one needs for rent, food, and daily life. Many families learn this alongside the Disability Tax Credit, so my guide to the Disability Tax Credit, explained in plain English, is a good companion read.
Payments out of the trust are a different story
Now for the part families sometimes miss. Assets inside the trust are generally treated one way, but payments coming out to the beneficiary are treated under ODSP rules in their own right. Depending on the amount and the purpose, a payment can affect benefits. The rules are detailed, and they can change, so a trustee should never have to guess.
Think of the trust as a reservoir and each payment as a tap. The reservoir itself is generally protected. What flows out, and what it is used for, deserve attention. Handled thoughtfully, payments can improve quality of life, from a better winter coat to a trip to see family. Handled carelessly, they can create avoidable problems, so a good trustee gets guidance before larger payments.
A Henson trust and an RDSP work together
People sometimes ask whether a family needs a Henson trust or an RDSP, as if it is one or the other. They do different jobs, and many families benefit from both. An RDSP is built for long term savings, and its superpower is the government grants and bonds that can add up over a lifetime. Learn more on our RDSP page. A Henson trust is built to receive inheritances and larger gifts in a way that generally protects benefit eligibility.
Picture it this way. The RDSP is where steady, planned saving grows over time, helped along by government contributions. The Henson trust is the safe landing place for a parent's estate or a grandparent's gift. Neither replaces the other. Together, with proper advice, they can give a person with a disability both a growing nest egg and a protected inheritance.
Choosing a trustee is the biggest decision
If you take one thing from this article, let it be this. The choice of trustee is the most important decision in the whole arrangement. This person will manage money, keep records, and hold enormous discretion over your child's quality of life, possibly for decades. Choose someone trustworthy, organised, and willing to ask for professional help. Many families also name a backup trustee, because life happens to trustees too.
Just as important, only a lawyer experienced in disability estate planning should draft a Henson trust. This is not the place for a copied template. The wording has to preserve that absolute discretion, and small drafting mistakes can change how the trust is treated. Talk to a lawyer who understands both estate law and disability benefits in Ontario before anyone signs anything.
Planning for a loved one with a disability takes extra steps, and I know it can feel like a lot. But every step you take now is one less crisis your child faces later, and that is real love in action. A properly built Henson trust will not solve every problem. What it can do is protect the benefits your loved one counts on while making sure your gift reaches them the way you intended. That peace of mind is worth the effort.
Where this fits: a Henson Trust is one piece of a bigger plan: See how estate and disability planning fits the full service list.
A quick note: this post is educational, not financial advice. For guidance on your own situation, book a free conversation. You don't have to figure this out alone. I'm here to help you through every step.