{"id":49202,"date":"2026-04-17T09:49:00","date_gmt":"2026-04-17T13:49:00","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=49202"},"modified":"2026-04-17T09:51:01","modified_gmt":"2026-04-17T13:51:01","slug":"how-a-henson-trust-can-protect-odsp-benefits-for-a-loved-one-with-a-disability","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/private-client\/how-a-henson-trust-can-protect-odsp-benefits-for-a-loved-one-with-a-disability\/","title":{"rendered":"How a Henson trust can protect ODSP benefits for a loved one with a disability"},"content":{"rendered":"\n

When a loved one lives with a disability, estate planning involves much more than dividing assets. It focuses on ensuring long\u2011term financial security while preserving access to crucial government benefits.<\/p>\n\n\n\n

In Ontario, a Henson trust, often called an \u201cabsolute discretionary trust,\u201d is an estate planning tool that allows individuals (typically parents) to set aside money or other valuable assets for a beneficiary with disabilities. It is designed to allow the beneficiary to receive financial support, without jeopardizing their eligibility for social assistance or access to publicly funded program benefits.<\/p>\n\n\n\n

What is a Henson trust in Ontario?<\/h2>\n\n\n\n

A Henson trust is a type of discretionary trust created inter vivos<\/em> during the settlor\u2019s lifetime, or as a testamentary trust established on death under the terms of a will to benefit a person with a disability, without giving them a guaranteed right to receive the trust\u2019s income or capital. While there is no limit on the amount of assets that can be contributed to a Henson trust, it is important to keep in mind that provincial or territorial disability-related support programs are based on income- or asset- tests, meaning that individuals cannot own certain assets or earn or receive income in excess of specified amounts.<\/p>\n\n\n\n

How does a Henson trust protect ODSP eligibility in Ontario?<\/h2>\n\n\n\n

In Ontario, the Ontario Disability Support Program<\/a> (\u201cODSP<\/strong>\u201d) provides assistance to individuals with mental or physical disabilities. To remain eligible for ODSP, a person cannot hold more than $40,000 in non-exempt assets. For example, if a beneficiary receives an inheritance outright, it will likely be treated as an asset (or income in the month it is received), which can push the beneficiary over eligibility thresholds and cause their benefits to be suspended or terminated. A properly drafted Henson trust ensures that a beneficiary\u2019s interest is excluded from asset calculations by not providing the beneficiary with an enforceable right to demand payments.<\/p>\n\n\n\n

While the Henson trust protects the trust\u2019s capital from being counted toward the ODSP asset limit, any funds that are actually distributed to the beneficiary are still subject to income rules established by the ODSP regulations. The rules differentiate between payments used for disability-related expenses and those intended for general living. As such, payments made from a Henson trust for approved disability-related items and services are fully exempt as income, with no limit on the amount that may be provided. Examples of exempt expenses include specialized mobility equipment, therapies not covered by the government, accessibility-related home renovations, and attendant care services.<\/p>\n\n\n\n

In contrast, there is a $10,000 limit for other payments, including discretionary payments from a trust, in a 12-month period. Any amount above this threshold distributed for non-disability related items would typically be deducted from the recipient\u2019s monthly ODSP payments. The primary nuance in making such distributions lies in properly characterizing the expense to ensure it falls within the ODSP exemptions.<\/p>\n\n\n\n

Key requirements when drafting a Henson trust<\/h2>\n\n\n\n

To be legally effective in Ontario, a Henson trust must meet three structural criteria:[1]<\/a><\/p>\n\n\n\n