What Is a Henson Trust and Can You Use One in Alberta

If your child has a disability and receives AISH, you may worry that an inheritance could put their benefits at risk. You may have heard of a Henson trust as the answer and want to know how it works in Alberta.

The phrase is a common label rather than a term you will find in the AISH rules themselves. What matters is how Alberta's rules treat a trust, and how the trust is written and run.

This article covers the law of Alberta.

Why an inheritance can affect AISH

AISH eligibility has an asset limit: non-exempt assets cannot be worth more than $100,000 combined. Alberta.ca counts cash accounts, TFSAs, RRSPs and cash inheritances, and lists a trust as an exempt asset.

That means money left outright to your child can count toward the limit. The same money held in a trust may be treated differently, which is the reason families look at trusts.

How the AISH regulation treats a trust

The AISH General Regulation (AR 96/2026), Schedule 2, s. 2(2)(l), exempts from asset valuation an asset held in a trust of which the applicant or client is a beneficiary, and the same applies where the cohabiting partner is the beneficiary. Whether this regulation is the version that applies to you depends on its in-force status, so it is worth confirming that with a lawyer before you rely on it.

Money received that is not income is exempt if it is invested within 365 days of receipt in such a trust or in a listed exempt asset, for example a principal residence. Otherwise a cash inheritance counts toward the $100,000 limit.

The Assured Income for the Severely Handicapped Act leaves asset rules to the regulations and requires clients to notify a director of a change in their or a cohabiting partner's assets. The Act itself has no trust provisions. Because regulations are updated, confirm the current version before you rely on it.

Trust income still matters

Exempt assets are not the end of the story. The regulation counts trust income that a director deems payable to a beneficiary, and it lets a director deem trust income payable to a beneficiary. So trust income can reduce benefits even though trust assets are exempt.

For trust income, the partial income deduction is 100% of the income up to $300 if there is no cohabiting partner or dependent child, or up to $600 if there is one, plus 25% of the remainder. These deductions are removed if income was not reported in a timely manner or was willfully misreported.

Report any trust income and any change in assets promptly, and ask the trustee to keep clear records.

How a trust like this is set up and run

A trust created by a will arises on death and is generally a testamentary trust, while one set up during a person's lifetime is an inter vivos trust. Either type can be considered for a child with a disability, and the right choice depends on your situation.

Alberta.ca lists a trust as exempt without further detail, so the way the trust is drafted matters and is something a lawyer should confirm for your child's circumstances. Do not assume that any trust will be treated as exempt.

Once the trust exists, the trustee's duties come from the deed and the Trustee Act:

• A trustee must act in good faith and in accordance with the terms of the trust, the best interests of the beneficiaries or purposes, and the Act.
• A trustee may pay capital for a minor's or an adult's maintenance, education or benefit on a basis of what is reasonable in the circumstances.
• A capital payment to a person with only a contingent interest requires court approval, and a trustee must not pay from capital if income is available for the same purpose.
• A trustee must not delegate the discretion to distribute trust property to beneficiaries.
• A trustee can apply to the court for directions, and following them discharges the duty unless they were obtained by fraud, wilful concealment or misrepresentation.

The deed itself generally prevails over a contrary provision of the Trustee Act unless the Act provides otherwise. Choosing a trustee who understands both the family and AISH reporting is a practical priority.

What to do next

• Confirm your child's current AISH status and what assets and income are counted.
• Talk to a lawyer about whether a trust suits your child and how it should be drafted.
• Review beneficiary designations and your estate plan so money does not pass outright to your child by accident.
• Choose a trustee, and a backup, who can manage payments and reporting.
• Check the current AISH regulation or ask AISH directly about the treatment of the trust.

Frequently asked questions