Henson Trusts in Saskatchewan: Protecting a Disabled Beneficiary

If someone you love has a disability and receives Saskatchewan income assistance, leaving them money directly can cause problems. A large inheritance may affect the support they depend on, and they may not be able to manage it alone.

A Henson trust is one tool families look at. This article explains in plain terms how it generally works, what a trustee can do, and which estate rules touch a beneficiary who is a dependent adult.

This article covers the law of Saskatchewan.

What a Henson trust is

A Henson trust is a discretionary trust. The person who sets it up names a trustee and a beneficiary with a disability. The trustee, not the beneficiary, decides if, when and how much to pay out.

The idea is that the beneficiary has no automatic right to demand the money. Because the trustee controls it, the trust is generally intended to stay separate from the beneficiary's own assets. Whether that works in practice depends on how the trust is written and on the rules of the benefit program.

Why families use one

• To leave an inheritance without handing the beneficiary a lump sum.
• To have a trusted person manage money for someone who may find it hard to do so.
• To pay for extras that benefits do not cover, at the trustee's judgment.
• To keep a long-term plan in place after the parents are gone.

The treatment of trusts under Saskatchewan's income assistance programs is set by those programs and can change. Ask a lawyer to confirm how your trust would be treated before you rely on it.

What the trustee can pay out

The trustee's powers come from the trust document. How much discretion a trustee has depends on the wording of the trust document and your situation, so it is worth confirming the details with a lawyer. Common questions a trustee weighs include:

• Will this payment be made to the beneficiary, or directly to a supplier?
• Does the payment affect the beneficiary's monthly benefits?
• Is the purchase reasonable and for the beneficiary's benefit, such as therapy, equipment, travel or education?
• Are records kept of every payment?

Paying a supplier directly is often treated differently from giving cash to the beneficiary, but the details depend on the program's rules. A trustee should check before making regular payments.

Estate rules that affect a beneficiary who is a dependent adult

When an estate goes through probate, a Notice to Public Guardian and Trustee (Form 16-12, two copies) is required if any beneficiary is under 18 or a dependent adult. Where the estate includes real property and no beneficiary is under 18 or a dependent adult, a Certificate of No Infants Interested can be requested.

Assets with a named beneficiary, such as life insurance and RRSPs or RRIFs, pass outside probate. That means who is named on the form matters, and a named person receives the money directly. Ask your lawyer how designations should line up with the trust.

Adult children unable to support themselves because of a disability are included as dependants who may claim under The Dependants' Relief Act, 1996 where a will makes inadequate provision.

What to do next

• Confirm which benefits the person receives and ask the program how a trust would be treated.
• Choose a trustee who is reliable, and consider a back-up trustee.
• Review beneficiary designations on insurance and registered plans.
• If you are an executor, check whether a beneficiary is a dependent adult and prepare the Public Guardian and Trustee notice.
• Speak with a lawyer about the trust wording before it is signed or relied on.

Frequently asked questions