The Henson Trust

Defined: Absolute Discretionary Trust (named after the man who spearheaded its acceptance as law) for the benefit of a special needs child beyond the age of 18.

Operation: The living beneficiary has no control over the assets or the workings of the Trust.

Beneficiary: The special needs child during his or her lifetime. Beyond the lifetime of the special needs child, residual beneficiaries receive the balance.(Other siblings, other relatives, charity(ies))

Why: Trust assets are not vested on behalf of the special needs child. Therefore, he/she can continue to qualify for income support (Ontario Disability Support Program Act) and extended health care benefits.

Henson Trust Design Issues

• Funding Sources
• Distribution of income instructions
• Trustee selection: Other siblings, other relatives, friends, corporate trustee?
• Fairness to other siblings
• Responsibility for investment decisions
• Accountability for investment decisions
• Trust tax return preparation
• Trustee compensation
• Direction of residue (potential conflict of interest)

Henson Trust Pitfalls

• Poor investment performance
• Grandparents' Wills can be out of sync with the parents plans
• Other gifts to the child can negate Henson Trust Logic

Summary

Most important activity: Make detailed Will plans and review your plans regularly with an estate planner and your lawyer.

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