Henson Trusts (Disability Trusts)

Henson Trusts (Disability Trusts)

The Supreme Court of Canada in SA v. Metro Vancouver Housing Corp. 2019 SCC 4 found that the trust, known as a Henson trust, did not qualify as an “asset” under the Metro Vancouver Housing Corporation, so as to disqualify a person with disabilities from their landlord’s rental assistance program, by reason that the applicant refused to disclose the value of the trust.

The BC Supreme Court and Court of Appeal both said that the trust was an asset that could disqualify the applicant from consideration for rental assistance, but the majority of the Supreme Court of Canada disagreed.

Features of Henson Trusts

The central feature of the Henson trust is that the trustee is given ultimate discretion with respect to payments out of the trust to the person with disabilities for whom the trust was settled, the effect being that the latter :

(a) cannot compel the former to make payments to him or her, and

(b) is prevented from unilaterally collapsing the trust under the rule in Saunders v. Vautier (1841), 1 Cr. & Ph. 240, 41 E.R. 482 (Eng. Ch. Div.).

Because the person with disabilities has no enforceable right to receive any property from the trustee of a Henson trust unless and until the trustee exercises his or her discretion in that person’s favour, the interest he or she has therein is not generally treated as an “asset” for the purposes of means-tested social assistance programs (D. W. M. Waters, M. R. Gillen and L. D. Smith, eds., Waters’ Law of Trusts in Canada (4th ed. 2012), at pp. 572-73).

The Henson trust therefore makes it possible to set aside money or other valuable property for the benefit of a person with disabilities in a manner that jeopardizes that person’s entitlement to receive social benefits as little as possible.

The meaning of “asset” was not defined in any of the documents that were part of the contract. It was not defined in a Metro Vancouver housing policy, but the application did not refer to the policy.

The majority noted that in everyday use “asset” means some kind of valuable property that a person can actually used to pay for things.

However, the court explained that her Henson trust does not meet this definition of asset because she had no control over whether should get any money from the trust, and could not count on it to pay the rent. ( The majority said it was not relevant that the applicant was a co- trustee of the trust, because she had no right to make any payments to herself on her own as all decisions had to be unanimous with the other trustee)

Because the trust was not an asset under the application, the Supreme Court of Canada said it could not disqualify the applicant from the rental assistance program.

This was the first time that the Supreme Court looked at Henson trusts. The majority did not say a Henson trust could never be treated as an asset, but only that it would depend on the criteria of the specific program.