A Henson Trust is a type of trust used in Canadian law to protect the assets of a person with a disability so they can still receive government benefits. It is named after Leonard Henson, who created it to protect his daughter’s inheritance. The trustee has absolute discretion over the assets, which can provide tax relief and protect assets from third parties.
A Henson Trust is a type of trust that is part of Canadian law. It is also referred to as an absolute discretionary trust or discretionary trust. A Henson Trust is a very specific type of trust that can only be used in planning for a person with a disability. The goal is to protect the legacy, as well as other assets, of the disabled person so that they can still collect any income-proof government entitlements or benefits. It became common in 1989 when the courts ruled that if the assets of a trust were not vested in the beneficiary, they could not be used as grounds for the person’s exclusion from government grant programs.
This type of trust is named after Leonard Henson, a man who was trying to protect his daughter Audrey, who had a developmental disability. If Mr. Henson had left his estate to her daughter, his total estate would be above the child benefit allowance limits. Audrey took care of the Guelph Association for Community Life, which was a family home. Mr. Henson’s will named the Guelph Association as trustee and Audrey as the beneficiary of a will trust. In the event that Audrey died, the remaining assets would go to the Guelph Association for Community Life.
The main aspect that makes the Henson Trust unique is that the trustee has absolute discretion in deciding whether to use the trust assets to help the beneficiary. The trustee also has control over what amount of assets will be given to the beneficiary, which is why the trustee is normally a parent or guardian. This means that the beneficiary effectively has no control over the assets, which is why they cannot be denied benefits from government programs.
There are many other financial benefits to setting up a Henson Trust. In certain situations, it can create a form of income tax relief because it will be taxed at a lower marginal rate. This is because the total assets of the beneficiary are not considered, only the assets within the trust.
It can also protect your assets from third parties. If the Henson Trust is set up as a living trust or a testamentary trust, it can be used to protect assets from marital division in the event of a divorce of the beneficiary. The assets protected by the trust are also immune from any claims made by creditors against the beneficiary.
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