Estate planning often requires balancing two competing goals. In Ontario, Henson trusts have become a valuable tool for providing long‑term financial security for a loved one while preserving their access to essential government benefits.
What Is a Henson Trust?
A Henson trust is a fully discretionary trust designed to benefit a person with a disability without jeopardizing their eligibility for government programs, such as the Ontario Disability Support Program (ODSP). If you read our prior article, we discuss in greater detail what is needed to create a Henson trust.
The defining feature is absolute trustee discretion. This means generally the trustee has no limitations placed on them when it comes to deciding if and when to pay the assets held within the trust. On the flip side, the beneficiary has no enforceable right to demand payments, which means the trust’s assets are not considered the beneficiary’s property for the purpose of eligibility calculations.
S.A. v. Metro Vancouver Housing Corporation, 2019 SCC 4
Background
S.A., the appellant, was a woman living with disabilities who received government assistance and lived in subsidized housing operated by Metro Vancouver Housing Corporation (MVHC).
MVHC required tenants to disclose their assets annually to determine eligibility for a rental subsidy program. The program had a soft asset cap of $25,000—assets above that amount could disqualify a tenant.
After her father died, S.A. became the beneficiary of a trust created under his will. The trust was structured as a fully discretionary Henson trust, with S.A. and her sister named as co‑trustees. MVHC argued that S.A.’s interest in the trust counted as an “asset” and therefore had to be disclosed. S.A. disagreed, asserting that she had no enforceable right to the trust property and therefore held no “asset” within the meaning of the program.
The central question before the Supreme Court was: Does a beneficiary’s interest in a fully discretionary Henson trust constitute an “asset” for the purpose of a means‑tested rental assistance program?
Ultimately, the Court held that because the beneficiary had no enforceable right to the trust property, the housing authority could not treat the trust as her personal asset when assessing eligibility for a rent subsidy.
Takeaway
A fundamental decision in estates and trust, this case clarified that individuals suffering from disabilities could be free to receive assets from a trust while not disqualifying their potential eligibility to receive social assistance.