.png)
Henson Trusts: Securing Financial Futures for Loved Ones with Disabilities
M. Wajahat Faizan
July 5, 2024
.png)
As lawyers we are part of the estate planning process that assists in securing the financial future of clients and their relatives with disabilities while ensuring their eligibility for provincial government benefits.
A Henson Trust is a specialized trust designed to provide financial security for individuals with disabilities without compromising their access to essential government assistance programs. The landmark case Amend Estate v. Henson (1989) by the Ontario Court of Appeal established that discretionary trusts, where trustees have absolute discretion over fund distribution, do not count as personal assets of beneficiaries.
This ruling allows individuals with disabilities to receive inheritances without losing their eligibility for benefits. By transferring legal ownership of the inheritance to a trustee who manages the assets on behalf of the beneficiary, a Henson Trust ensures continued eligibility for government assistance.
Benefits and Drawbacks of a Henson Trust
Henson Trusts offer an invaluable solution for families aiming to support relatives with disabilities without affecting their eligibility for government benefits. By assigning legal ownership of the inheritance to a trustee with "absolute and unfettered discretion," the trust ensures that beneficiaries cannot directly access the funds, thus preserving their entitlement to social assistance. This arrangement enhances the beneficiary’s quality of life through prudent financial management while also offering favorable tax treatment, as the income is taxed at the beneficiary's marginal rate, often resulting in minimal tax liability.
One significant advantage of a Henson Trust is its ability to protect beneficiaries from financial mismanagement and potential exploitation. Trustees manage and disburse the funds, ensuring the inheritance is used wisely and lasts to meet the beneficiary's needs. However, selecting a reliable trustee is crucial, as conflicts of interest can arise, particularly if the trustee is also an heir to the remaining assets. Additionally, the trust involves ongoing administrative costs, including legal and accounting fees, which need to be considered.
Despite the complexities involved, Henson Trusts remain an essential tool for securing the financial future of individuals with disabilities, balancing the need for support with the preservation of critical government benefits. This trust structure effectively addresses concerns related to asset limits that can disqualify individuals from receiving benefits, ensuring that their financial and personal needs are met without compromising their access to essential assistance programs.
If you are considering setting up a Henson Trust or have questions about how this trust can benefit your loved ones, please reach out to our Associate Lawyer, Muhammad Wajahat Faizan, at mwfaizan@kormans.ca.
Faizan’s academic background includes a Juris Doctor (J.D.), an LL.M. from Aberdeen Business School in Scotland, and an LL.B. (Hons.) from the University of London. He has also earned certifications in Construction Law and Public Policy from the prestigious Osgoode Hall Law School, showcasing his diverse expertise across multiple areas of law. After being called to the Ontario Bar in 2020, he gained experience in real estate, commercial, and immigration law at a boutique firm before joining Kormans LLP.
Specializing in a wide range of legal services, Faizan focuses on residential and commercial real estate transactions, financing, wills and estate planning, and contractual matters. His expertise also extends to Islamic wills and Sharia-compliant financing, where he offers culturally sensitive solutions tailored to the needs of diverse clients.
Faizan’s thought leadership is evident in his published articles on Islamic wills and Halal mortgages, which can be found on the Kormans website. His expertise extends beyond Islamic wills, with a deep understanding of real estate law showcased through writings on topics such as Tarion warranties, joint tenancy, and easements. These works highlight his broad knowledge of property law and commitment to providing clients with clear, informed guidance.
In addition to his contributions to real estate law, Faizan has made significant strides in immigration law. His representation before the board in the landmark case of Vilcassim v. Canada helped establish a crucial precedent in children’s rights within Canadian immigration law.
With a strong background in law, Faizan continues to teach as one of the pioneering professors in the Graduate Diploma in Immigration and Citizenship Law program at the prestigious Queen’s University, where he shares his practical experience and knowledge with future professionals.
His contributions to the legal field were recognized with the Queen Elizabeth II Platinum Jubilee Award Pin, honoring his dedication and service to immigration law. He is also the recipient of the King Charles III Coronation Medal, a prestigious award recognizing contributions to community and public service. This recognition was granted through a rigorous selection process led by the Mississauga Streetsville Community Leadership Association and the Canadian Heraldic Authority at the Chancellery of Honours, Rideau Hall.
Outside of his professional life, he enjoys travelling, has a passion for cricket, plays weekend squash and frequently participates in youth mentorship programs.
Good news for first-time home buyers! On May 27, 2025, legislative proposals were introduced in the Parliament to amend the Excise Tax Act by creating a new GST rebate specifically for first-time home buyers.
Purchasing a condominium in Ontario demands more than selecting the right unit! One of the most important aspects of this transaction is a thorough review of the status certificate.
As part of a commercial real estate sale transaction, our office often gets retained during the early part of the transaction in order to review the Agreement of Purchase and Sale (the “APS”).
.webp)
