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Special Needs Trust Ontario

Henson Trust (absolute discretionary trust) preserves ODSP and disability benefits for your loved one. Don't let an inheritance disqualify them. Lexaltico LLP.

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Frequently Asked Questions

What is a Henson trust and why do I need one for a special needs child?

A Henson trust (also called a discretionary family trust) is created for the benefit of a vulnerable person without triggering loss of government benefits (disability support, Medicaid-equivalent programs). The trustee holds assets at discretion and provides for the beneficiary's enhanced quality of life (therapies, education, recreation) without direct ownership that would disqualify them from benefits. Without a Henson trust, leaving inheritance directly to a disabled child causes them to lose government benefits and spend down the inheritance for basic support. A Henson trust provides financial security while protecting government support eligibility.

Relevant legislation: Henson v. Henson, 2006 CanLII 25614 (ON CA)

How do I create a Henson trust in my will?

Include language in your will establishing a discretionary family trust: assets go to a trustee (not to the beneficiary directly), the trustee has discretion to distribute for the beneficiary's benefit without creating entitlement, and distributions never become the beneficiary's property. Key language: "The trustee shall have absolute discretion whether to distribute income or capital, and no beneficiary shall have a vested or contingent interest in the trust." Work with an estate lawyer experienced in special needs planning. Improper wording risks the trust failing to protect benefit eligibility.

Relevant legislation: Succession Law Reform Act, S.O. 1990, c. S.26

Who should be trustee of a Henson trust for my special needs child?

Choose someone absolutely trustworthy, committed to your child's wellbeing, and understanding of government benefits. Options: a sibling, parent, or corporate trustee (bank or trust company). Siblings often become trustee, providing continuity and love. Corporate trustees offer professional management and impartiality but charge fees (0.5-1% annually). Name alternates—if the primary trustee dies or declines, you need succession. Consider naming a "trust protector" (separate from trustee) to oversee trustee decisions. For minor children, name an alternate to step in if your child's sibling becomes unable.

Relevant legislation: Succession Law Reform Act, S.O. 1990, c. S.26

What can and cannot be paid from a Henson trust?

A Henson trust can pay for: therapies, education, recreation, travel, computers, furniture, clothing, and quality-of-life enhancements not covered by government programs. It cannot pay: food, housing, or basic necessities (that could trigger loss of benefits). The trustee must be careful—payments that substitute for government-provided care can disqualify benefits. Work with both an estate lawyer and a benefits specialist to structure the trust properly. Document all distributions carefully to show they're discretionary enhancement, not basic support.

Relevant legislation: Ontario Disability Support Program; Canada Disability Benefit regulations

How much money should I leave in a Henson trust?

It depends on your child's life expectancy, needs, and available government supports. A $100,000 trust ($500/month for 17 years at 3% return) might supplement therapy, education, and recreation. A $500,000 trust ($2,500+/month) provides extensive enhancement. Work with an accountant and special needs planner to estimate lifetime costs. Consider: life expectancy, therapies needed, educational goals, and government benefit deficiencies. Many parents leave between $100,000 and $500,000, depending on wealth. Document your reasoning so the trustee understands your intentions.

Relevant legislation: Estate planning for special needs beneficiaries

What happens to a Henson trust after my special needs child dies?

Specify in your will who receives remaining trust assets. Options: distribute to other children, donate to a disability charity supporting your child's condition, or establish a scholarship. This prevents unintended wealth transfer. Some parents use remainder provisions to reinforce their values—if your child had autism, you might direct remaining assets to autism research. Discuss remainder beneficiaries with your trustee and family to prevent surprises or conflict.

Relevant legislation: Succession Law Reform Act, S.O. 1990, c. S.26

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Special Needs Trust Ontario

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