By Estate Lawyer Tim Louis
If you have a loved one living with a disability, estate planning must balance compassion with legal precision. Families often worry about how to leave an inheritance without putting vital disability benefits at risk. In British Columbia, a Henson Trust is one of the most effective tools to protect both financial stability and quality of life for a disabled beneficiary.
A Henson Trust is a special type of discretionary trust. It allows you to provide long-term support for your loved one while ensuring they remain eligible for government disability assistance programs. Unlike a standard inheritance, funds placed in a Henson Trust are managed by a trustee who has full discretion over distributions. This structure means your loved one receives the benefit of your estate without losing essential medical and financial supports.
At Tim Louis & Company, we understand how important it is to create security for your family while preserving dignity and independence. With the right plan, you can be confident your estate will protect—not disrupt—the future of those you care for most.
A Henson Trust is a type of discretionary trust designed to protect the inheritance of a person living with a disability. Unlike a standard trust, the beneficiary of a Henson Trust has no legal right to demand payments. Instead, the trustee has full discretion over when and how funds are distributed. This discretionary structure is what allows the beneficiary to maintain eligibility for government disability benefits such as BC’s Persons with Disabilities (PWD) program.
The concept originates from the landmark Ontario case Henson v. Ontario (Director of Income Maintenance, 1989). In that case, the court ruled that because the disabled beneficiary could not compel payments, the trust assets could not be counted against her when determining eligibility for government assistance. This precedent gave rise to what is now known across Canada as the Henson Trust.
What sets a Henson Trust apart from an ordinary trust is its protective function. In a regular trust, distributions may be required at set times or in set amounts, potentially disqualifying a beneficiary from much-needed disability supports. A Henson Trust, by contrast, ensures that funds are available for extras—such as improved quality of life, medical equipment, or housing—while core government benefits remain intact.
In British Columbia, Henson Trusts are recognized as a crucial estate planning tool for families who want to provide for a disabled loved one without risking their financial security.
In British Columbia, many families rely on the Persons with Disabilities (PWD) program to provide essential financial and medical support for a loved one living with a disability. According to the BC Government’s Disability Assistance program, eligibility depends on strict asset and income limits. An inheritance received directly by a person with PWD status can easily exceed these thresholds, resulting in the suspension or loss of benefits.
This is where a Henson Trust becomes indispensable. By placing assets into a trust that is fully discretionary, the beneficiary never has control or ownership of the funds. Since the trustee decides when and how to make distributions, the Ministry cannot count the trust as part of the beneficiary’s personal assets. This ensures continued access to vital disability assistance while still allowing the family’s inheritance to enhance quality of life.
Without a Henson Trust, families may unintentionally jeopardize a disabled heir’s long-term financial stability. Even a modest inheritance can interrupt monthly disability payments, medical coverage, and supplementary benefits. Reinstating those benefits can be complex, stressful, and sometimes impossible.
Henson Trusts provide peace of mind. They give families confidence that their planning will protect, not disrupt, the future security of their loved ones. For individuals with disabilities, it means maintaining dignity, independence, and financial stability — while still benefiting from the legacy left behind.
Q: Does a Henson Trust protect disability benefits in BC?
A: Yes. A properly drafted Henson Trust ensures that assets do not count toward a beneficiary’s financial eligibility for provincial disability assistance, allowing them to keep essential PWD benefits while receiving long-term support.
A Henson Trust is built on a simple but powerful principle: the assets placed inside the trust are not legally considered the property of the beneficiary. This is achieved through the full discretion granted to the trustee.
The trustee has absolute control over the trust. They decide if, when, and how much money is distributed to the disabled beneficiary. Because the beneficiary cannot demand funds or require distributions, government agencies such as the BC Ministry of Social Development and Poverty Reduction cannot treat the trust’s assets as belonging to the beneficiary. This preserves eligibility for the Persons with Disabilities (PWD) program and other supports.
Without this discretionary structure, an inheritance could be treated as income or assets in the beneficiary’s name — potentially disqualifying them from PWD assistance. With a Henson Trust, however, the funds are available to improve quality of life without undermining essential benefits. The trust acts as a financial safety net that sits alongside, not in place of, provincial support.
A Henson Trust can be created and funded in several ways:
Each method gives families flexibility in planning how to protect their loved one’s future.
In practice, a Henson Trust often provides for “extras” that disability benefits do not cover: enhanced housing, medical equipment, therapies, or travel. This allows a disabled heir to live with greater comfort and dignity, while continuing to receive crucial government benefits.
A Henson Trust offers families more than legal protection — it provides peace of mind. By shielding assets from being counted as a disabled person’s property, it allows beneficiaries to preserve their disability benefits while still receiving the support of an inheritance. This ensures that essential programs, like BC’s Persons with Disabilities (PWD) assistance, remain intact.
Beyond benefit preservation, a Henson Trust creates long-term financial security. Families can be confident that resources will be available for housing, medical needs, therapies, or other life-enhancing supports. Because the trustee controls when and how funds are used, money is managed responsibly and lasts longer.
A well-drafted Henson Trust also helps reduce family disputes. By clearly outlining the role of the trustee and the purpose of the trust, it minimizes the risk of conflict among heirs and provides legal certainty during what can otherwise be a difficult time.
Most importantly, a Henson Trust supports the dignity and independence of a person living with a disability. It ensures that they can enjoy a better quality of life, without the fear of losing government assistance or becoming financially vulnerable.
Speak with Tim Louis & Company about how a Henson Trust can safeguard your family’s future.
While a Henson Trust is a powerful estate planning tool, it is not without challenges. Families must carefully weigh the following considerations to ensure the trust functions as intended.
Choosing the right trustee is critical. Since the trustee has full discretion over how and when to distribute funds, they must be trustworthy, financially responsible, and committed to acting in the beneficiary’s best interests. Poor trustee selection can lead to mismanagement or family conflict.
Henson Trusts must be drafted with precision. If the wording does not clearly establish the discretionary nature of the trust, government agencies could treat the assets as belonging to the beneficiary — jeopardizing disability benefits. Working with an experienced lawyer is essential to avoid these mistakes.
Although recognized across Canada, Henson Trusts must comply with British Columbia’s estate and trust laws. Local statutes and case law can affect how the trust is interpreted. Without proper compliance, the protective features may be weakened.
Laws and government benefit programs evolve. A Henson Trust that works today may require adjustments in the future. Families should review their estate plans regularly to ensure continued protection.
Q: Who should act as trustee for a Henson Trust?
A: A trustee should be a reliable individual or institution who can manage funds responsibly, act impartially, and always prioritize the disabled beneficiary’s best interests.
When planning for the future of a disabled beneficiary, families often compare different financial and legal tools. While each option can play a role in estate planning, a Henson Trust offers protections that others cannot.
An RDSP is a government-registered savings plan that allows families to set aside money for a person with a disability. Contributions can grow tax-deferred, and the plan may qualify for government grants or bonds. However, RDSPs have strict rules about withdrawals, age limits, and maximum contribution periods. Unlike a Henson Trust, funds in an RDSP are considered an asset of the beneficiary and may impact eligibility for certain benefits if withdrawals are not carefully managed.
A standard discretionary trust can also allow a trustee to decide how funds are distributed. However, if it is not structured with the specific protective features recognized in Henson v. Ontario, the assets may still be considered available to the beneficiary. The Henson Trust is unique because the beneficiary has no enforceable right to demand payment — the key feature that preserves disability benefits.
Some families attempt to use joint accounts with a parent or sibling to manage funds for a disabled loved one. While simple in appearance, joint accounts are risky. They expose funds to the joint owner’s creditors, divorce proceedings, or estate disputes after death. They also lack the clear legal protections and accountability built into a Henson Trust.
Q: What’s the difference between a Henson Trust and an RDSP?
A: An RDSP is a government savings plan with grants and strict rules on contributions and withdrawals, while a Henson Trust is a discretionary trust that protects eligibility for disability benefits by keeping assets out of the beneficiary’s control.
Consider a Vancouver family with an adult daughter, Emily, who receives Persons with Disabilities (PWD) benefits. Her parents want to ensure that when they pass away, Emily is financially secure — but they are worried that a direct inheritance could disqualify her from provincial assistance.
Working with their estate lawyer Tim Louis, they establish a Henson Trust in their wills. Instead of leaving money directly to Emily, they direct the inheritance into the trust. A trusted family friend is appointed as trustee, with full discretion over how and when to provide financial support.
After her parents’ passing, Emily continues to receive her PWD benefits because the inheritance is not considered her personal asset. At the same time, the trustee can use the trust to pay for extras: improved housing, therapies, medical devices, and even small luxuries that enhance her quality of life.
This planning strategy — recommended by advocacy organizations such as Disability Alliance BC — allows families to protect government benefits while still providing meaningful financial support.
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At Tim Louis & Company, we bring over 40 years of experience helping Vancouver families navigate the complexities of estate planning, wills, and disability law. Our firm understands that planning for a loved one with a disability requires both legal precision and compassion. Every family situation is unique, and we take the time to create tailored solutions that safeguard benefits, reduce risks, and promote dignity and independence.
We have successfully guided many families through the process of setting up Henson Trusts, ensuring their loved ones remained eligible for Persons with Disabilities (PWD) benefits while still receiving meaningful financial support.
“Found Tim to be very knowledgeable at helping us to protect the financial future of our daughter with special needs.” — Phyllis Siu, ★★★★★ Google review
When you work with Tim Louis & Company, you can expect clear advice, proven strategies, and unwavering support every step of the way.
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For families exploring Henson Trusts and estate planning for disabled beneficiaries, the following resources provide additional guidance and authority:
BC Government — Disability Assistance (PWD)
Eligibility, income/asset limits, exempt assets, and how to apply for BC Persons with Disabilities (PWD) benefits. Essential when planning a Henson-style trust to keep benefits while supporting quality of life. Vancouver/BC families start here for rules and forms.
https://www2.gov.bc.ca/gov/content/family-social-supports/services-for-people-with-disabilities/disability-assistance
Canada Revenue Agency — Prescribed Disability Trusts (PDT)
Federal guidance on Prescribed Disability Trusts, tax treatment, and how PDTs interact with RDSPs and estates. Useful for trustees and advisers coordinating BC PWD rules with CRA requirements.
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-disability-savings-plan-rdsp/prescribed-disability-trust.html
Disability Alliance BC — Estate Planning Resources
BC non-profit with practical guides on wills, trusts, and PWD benefits. Clear, community-tested resources for Vancouver/BC families supporting an adult child with disabilities.
https://disabilityalliancebc.org/
CanLII — British Columbia Estate & Trust Case Law
Free case law search for BC trusts, Henson trusts, and estate decisions. Tip: search “Henson trust British Columbia” or “PWD eligibility trust” and filter to BC Courts to see local precedents.
https://www.canlii.org/en/bc/
Probate Lawyer — Vancouver
What probate means in BC, timelines, costs, and how a well-drafted trust can simplify estate administration for families. Local help from Tim Louis & Company.
https://timlouislaw.com/probate-lawyer-vancouver/
Estate Planning for Blended Families (BC)
Strategies for second marriages and step-children in British Columbia, including trusts that protect vulnerable beneficiaries while avoiding conflict.
https://timlouislaw.com/blended-family-estate-planning/
Mental Capacity & Estate Litigation — Vancouver/BC
How BC courts assess capacity, deal with undue influence, and protect beneficiaries. When to seek a committee, vary a will, or use a trust solution.
https://timlouislaw.com/mental-capacity-and-estate-litigation-services-by-tim-louis/
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Henson Trusts for Disabled Beneficiaries in BC – Insights from Estate Lawyer Tim Louis By Estate Lawyer Tim Louis If you have a loved one living with a disability, estate planning must balance compassion with legal precision. Families often worry about how to leave an inheritance without putting vital disability
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