A Henson trust is a type of trust that allows those receiving provincial disability assistance to stay on those benefits while still enjoying some of the benefits of a gift or inheritance. If you have a child, spouse, or relative with a disability, and are thinking about providing for them in a will or otherwise, the question is: How can I leave money to support them without accidentally cutting off the benefits they rely on? This dilemma happens in BC, because in the provincial PWD system, benefits are “means-tested,” meaning the amount a person owns can affect eligibility to the program.
The PWD Benefits System in BC
The BC Government provides various benefits to those who qualify as disabled under its Persons With Disability (PWD) program. The program is not for anyone with a disability though. There is a maximum amount of income and a maximum amount of assets that individuals in the program can have. The maximum amount of earned income per year is currently $16,200 and the maximum amount of assets is $100,000 (for a single person). If a person with a disability exceeds those limits, their government benefits will reduce or even be cut off. So the question is, how to do it?
The basic idea of a Henson trust
A Henson trust is a special kind of trust designed for someone with a disability. Instead of giving money directly to the person (which might push their assets above a benefit limit), the money is held in a trust and managed by a trustee. The key feature is discretion: the trustee decides when and how to use trust money to help the beneficiary.
Because the beneficiary does not control the money and cannot demand payments, the trust assets are not counted the same way as personal assets for disability benefit rules. The result: the person can receive extra support for quality-of-life needs while potentially keeping important government assistance. Unlike some kinds of trusts, these trusts are completely above board with the government. They need to be registered with the Ministry and the trustee of the trust (the person in charge of trust) also needs to periodically report to the Ministry.
What can a Henson trust pay for?
A Henson trust is usually meant to improve a person’s daily life in practical ways. Examples include:
- Caregiver services
- Education or training
- Home renovations necessary because of the disability
- Home maintenance repairs
- Medical aids
- Independent living expenses: any other item or cost that will help the person live more independently
In plain terms: it can help cover the “extras” that make life safer, easier, and more enjoyable.
How is a Henson trust created?
A Henson trust is commonly set up in one of two ways:
- Through a will (often called a “testamentary” trust): it begins after the person creating it passes away.
- During life (often called an “inter vivos” trust): it can be funded while the person is still alive.
Many families choose the will approach because it’s simpler and avoids moving money into the trust right away. Creating it through a will also confers the trust with special tax treatment – more on that later. Either way, the trust document needs very careful wording otherwise it may not meet the Ministry’s stringent criteria. This is a major reason people involve a trust lawyer.
Who should be the trustee?
The trustee is the person (or trust company) who manages the trust and makes decisions about spending. Picking a trustee of a Henson trust is one of the most important steps.
A good trustee is:
- Responsible with money
- Patient and reliable
- Good at keeping records
- Ideally knowledgeable about the beneficiary and their needs
- Comfortable saying “yes” and “no” when needed
Some families choose two trustees—for example, a practical money person plus someone close to the beneficiary—so decisions are balanced. Where nobody is obvious, a good choice is a trust company in BC.
Where “QDT” fits in: the Qualified Disability Trust
You may also hear the term QDT, which stands for Qualified Disability Trust. A QDT is not the same thing as a Henson trust—but they can overlap.
A Qualified Disability Trust (QDT) is a type of prescribed trust under Canadian tax rules that may allow certain trusts set up for a person with a disability to be taxed in a more favorable way (depending on the situation and elections made each year). In general, it’s intended to help families who are supporting a beneficiary who is eligible for the Disability Tax Credit.
The benefits of a QDT are many. They enjoy favorable marginal tax rates (the regular trust tax rate is quite punitive). Homes held inside a QDT also benefit from the Principal Residence Exemption (whereas homes held inside regular trusts do not).
Because QDT rules have very specific requirements, it’s advisable that people work with a trust lawyer to structure things properly.
Why families choose a Henson trust
Families often consider a Henson trust because it can:
- Help protect disability benefits
- Provide long-term support without handing over a large lump sum
- Create a plan that continues even when parents are gone
- Allow flexible spending based on real-life needs over time
The biggest mistakes to avoid with Henson Trusts
Common problems include:
- Leaving money directly to the person (even with good intentions)
- Naming the wrong trustee—or no backup trustee
- Using trust wording that isn’t truly discretionary
- Forgetting about beneficiary designations (like RRSPs or insurance) that bypass the will
- Not coordinating the trust with tax planning, including potential QDT status
The worst mistake of all would be to leave the disabled beneficiary out of your will, instead giving their money to someone else, relying on that trusted person to administer the money for the person with a disability. While well intentioned, this plan often results on tens of thousands of dollars in legal fees. This plan often results in the Public Guardian and Trustee of BC (a branch of the government) contesting the will (and winning) on behalf of the person with a disability.
When to talk to a trust lawyer
A trust lawyer can help you decide whether a Henson trust makes sense, draft it correctly, and coordinate your will, beneficiary designations, and trustee plan. If you’re aiming for both benefit protection and smart tax planning (including whether the trust could qualify as a QDT (Qualified Disability Trust)), professional guidance is especially important.
A well-designed Henson trust can turn uncertainty into a clear plan—helping your loved one stay supported, secure, and cared for over the long term.
Next Steps:
A trust lawyer at Westcoast Wills & Estates will work with you to create a well thought out estate plan that includes a Henson Trust.
