Henson Trust and AISH Benefits Alberta

Planning for a loved one with a disability requires care.

You may want to leave them money in your will, help them financially during your lifetime, or make sure they are supported after you pass away. But if your loved one receives Assured Income for the Severely Handicapped, commonly known as AISH, an outright inheritance or direct gift may create problems.

AISH is a needs-tested program. That means the recipient’s income and assets can affect eligibility and benefit amounts. If a person receiving AISH receives money directly, that money may push them above the permitted asset threshold or reduce their monthly benefits.

A Henson trust may help avoid that result.

When properly drafted, a Henson trust can allow funds to be set aside for a loved one with a disability while helping protect their access to AISH benefits. It can be a powerful estate planning tool, but the wording, trustee selection, and administration of the trust all matter.

Libra Law helps families, caregivers, executors, and business owners create practical estate plans that protect loved ones and reduce avoidable legal problems.

What Is AISH?

AISH stands for Assured Income for the Severely Handicapped.

It is an Alberta program that provides financial and health-related support to eligible adults with severe and permanent disabilities. For many recipients, AISH is an essential source of stability.

AISH can help cover basic living expenses and may also provide access to important health benefits. Because of this, families often want to make sure their estate plan does not accidentally interfere with a loved one’s eligibility.

This is where careful planning becomes important.

Why an Inheritance Can Create Problems for Someone on AISH

If a loved one receiving AISH is named as a direct beneficiary in a will, they may receive their inheritance personally.

For example, a parent may leave $200,000 directly to an adult child who receives AISH. The intention is loving and practical. The parent wants to make sure their child has support.

But a direct inheritance may be treated as the child’s asset. If that asset puts the child above the permitted non-exempt asset limit, it may affect their AISH eligibility.

This can create a difficult outcome. The inheritance meant to help the person may reduce or interrupt the benefits they rely on.

A direct inheritance may also create practical concerns if the beneficiary is unable to manage money independently, is vulnerable to financial pressure, or needs long-term support over many years.

What Is a Henson Trust?

A Henson trust is a type of discretionary trust often used in estate planning for a person with a disability.

In a Henson trust, money or property is held by a trustee for the benefit of the person with a disability. The key feature is discretion. The beneficiary does not have an automatic right to demand payments from the trust. Instead, the trustee decides when and how trust funds are used for the beneficiary’s benefit.

In simple terms, the trust says:

“This money is set aside to help the beneficiary, but the beneficiary does not personally control it or have an enforceable right to demand payments.”

That distinction is important because the trust assets may not be treated the same way as money owned directly by the beneficiary.

How a Henson Trust Can Help Protect AISH Benefits

A properly drafted Henson trust may help protect AISH benefits because the assets are held in trust rather than being given directly to the AISH recipient.

Instead of the beneficiary receiving a lump sum inheritance personally, the inheritance can be placed into a trust. The trustee then manages the funds and uses them to support the beneficiary in appropriate ways.

This can help with:

• Preserving access to AISH benefits
• Avoiding a sudden increase in the beneficiary’s personal assets
• Providing long-term financial support
• Protecting the beneficiary from financial pressure or exploitation
• Giving a trusted person control over how funds are used
• Supporting quality of life beyond basic government benefits
• Creating structure after a parent or caregiver passes away

A Henson trust is not just about preserving benefits. It is also about thoughtful long-term planning.

For help with wills, trusts, and estate planning, visit Libra Law’s Wills and Estates service page.

Why Discretion Matters

The most important part of a Henson trust is the trustee’s discretion.

If the beneficiary has the right to demand payments, control the funds, or require the trustee to distribute money, the trust may not provide the intended protection.

A Henson trust should be drafted so the trustee has full discretion over payments. This means the trustee decides whether to make a payment, when to make it, how much to pay, and what the funds should be used for.

This discretion helps distinguish the trust assets from assets owned directly by the beneficiary.

If the trust is poorly drafted, the beneficiary may be treated as having too much control or entitlement. That can create risk for AISH eligibility.

What Can a Henson Trust Pay For?

A Henson trust may be used to improve the beneficiary’s quality of life.

Depending on the trust terms and the beneficiary’s needs, trust funds may help pay for things such as:

• Personal care items
• Clothing
• Education or training
• Recreation and hobbies
• Travel
• Transportation
• Technology
• Medical or dental expenses not otherwise covered
• Therapy or wellness supports
• Home accessibility improvements
• Companion care
• Special equipment
• Services that support independence
• Experiences that improve quality of life

The goal is usually to supplement the beneficiary’s life, not replace the support they receive through AISH.

Trustees should be careful before making payments directly to the beneficiary. Depending on the type of payment, income rules may apply and benefits may be affected. The trustee should understand how distributions are treated before funds are paid.

Trust Assets vs Trust Income

One important point families often miss is the difference between trust assets and trust income.

The assets held in a properly structured trust may be treated as exempt for AISH purposes. However, income paid from a trust may still affect the beneficiary’s AISH benefits.

This means the trust must be carefully administered.

For example, the trustee may need to consider:

• Whether money should be paid directly to the beneficiary
• Whether the trust should pay expenses directly to third parties
• Whether a payment may be treated as income
• Whether the beneficiary needs to report the payment
• Whether the payment could reduce benefits
• Whether the proposed use is consistent with the trust terms

A Henson trust is not something to create and forget. It must be managed properly.

Who Should Be the Trustee?

Choosing the trustee is one of the most important decisions in a Henson trust.

The trustee will have significant responsibility. They may control how funds are invested, when payments are made, what expenses are paid, and how the trust supports the beneficiary over time.

A good trustee should be:

• Trustworthy
• Financially responsible
• Organized
• Patient
• Familiar with the beneficiary’s needs
• Willing to communicate with family and advisors
• Able to follow the trust terms
• Able to keep proper records
• Able to understand AISH-related issues
• Likely to remain available over the long term

The trustee does not always need to be a family member. In some cases, a professional trustee, trust company, or co-trustee arrangement may be appropriate.

The right choice depends on the size of the trust, the complexity of the beneficiary’s needs, family dynamics, and the long-term plan.

Should You Name More Than One Trustee?

In some cases, naming more than one trustee may be helpful.

For example, one trustee may understand the beneficiary’s personal needs, while another may have stronger financial skills. A co-trustee structure can create balance and accountability.

However, multiple trustees can also create delays or disagreements if they do not communicate well.

Before choosing co-trustees, consider:

• How decisions will be made
• Whether trustees must act unanimously
• What happens if trustees disagree
• Whether one trustee can resign
• Who replaces a trustee
• Whether a professional trustee should be involved
• Whether the arrangement will still work years later

The trust should include clear trustee powers and replacement provisions.

When Should a Henson Trust Be Created?

A Henson trust can be created in different ways.

Many families create a Henson trust through a will. In that case, the trust comes into effect after the will-maker dies.

A Henson trust may also be created during a person’s lifetime, depending on the circumstances and legal advice received.

A will-based trust is common because parents or caregivers often want to leave an inheritance to a loved one with a disability without giving the funds directly to them.

However, waiting until later to plan can create problems. If a person dies without a proper will or trust, the beneficiary may receive funds directly or the estate may be divided in a way that does not reflect the family’s intentions.

If you are preparing or updating your will, you may also want to review Libra Law’s article on Affidavit of Witness to a Will in Alberta, which explains one document commonly connected to estate planning and probate.

What Happens If There Is No Henson Trust?

Without a Henson trust, a gift or inheritance may be paid directly to the loved one with a disability.

That can create several risks:

• The beneficiary may exceed AISH asset limits
• AISH benefits may be reduced or interrupted
• The beneficiary may have to report the inheritance
• Funds may be spent too quickly
• The beneficiary may be vulnerable to financial pressure
• Family members may disagree about how the money should be used
• The estate may need urgent legal advice after death
• The beneficiary may lose access to important supports

Even if the beneficiary has strong support from family, a direct gift may still create unnecessary benefit and planning issues.

A Henson trust can provide a more structured path.

Henson Trusts and Wills

A Henson trust should be carefully integrated into the will.

The will should clearly state:

• That the trust is being created for the beneficiary
• Who the trustee is
• Who the alternate trustee is
• What property or share of the estate goes into the trust
• How much discretion the trustee has
• What the trustee may use funds for
• Whether payments should be made directly or indirectly
• What happens when the beneficiary dies
• Who receives any remaining trust property
• How trustee compensation and expenses are handled

The wording should be precise. A few unclear sentences in a will may create serious consequences later.

This is not an area where families should rely on generic templates.

Henson Trusts and Estate Administration

A Henson trust also affects the executor’s role.

If the will creates a trust, the executor may need to transfer the correct estate assets into the trust after death. In some cases, the executor and trustee may be the same person. In other cases, they may be different people.

The executor may need to work with the trustee, accountant, financial advisor, and lawyer to make sure the estate is administered properly.

If you are naming an executor or acting as one, read Libra Law’s guide on Executor Compensation in Alberta to better understand executor responsibilities, fees, and expenses.

Henson Trusts and the RDSP

A Registered Disability Savings Plan, often called an RDSP, may also be part of disability planning.

An RDSP and a Henson trust are not the same thing.

An RDSP is a registered savings plan designed for eligible persons with disabilities. It may include government grants and bonds, depending on eligibility. A Henson trust is a legal trust that can hold assets for the beneficiary’s benefit.

In some cases, a family may use both an RDSP and a Henson trust as part of a broader plan.

The right approach depends on the beneficiary’s eligibility, age, needs, family resources, tax considerations, and estate planning goals.

Common Mistakes Families Make

Families often make mistakes when trying to provide for a loved one who receives AISH.

Common mistakes include:

• Leaving an inheritance directly to the beneficiary
• Using a simple will without disability planning
• Assuming AISH will not be affected by an inheritance
• Naming the beneficiary directly on life insurance or registered accounts without advice
• Creating a trust but giving the beneficiary too much control
• Choosing the wrong trustee
• Failing to name an alternate trustee
• Not explaining the plan to key family members
• Forgetting to coordinate the will with other beneficiary designations
• Assuming trust income and trust assets are treated the same way
• Failing to get legal advice before making payments from the trust
• Not reviewing the estate plan after changes in family circumstances

These mistakes can often be avoided with proper planning.

Common Mistakes Trustees Make

Trustees also need to be careful.

A trustee managing a Henson trust should not assume that every payment is harmless. Poor administration can create problems for the beneficiary.

Common trustee mistakes include:

• Paying large amounts directly to the beneficiary
• Failing to keep records
• Mixing trust funds with personal funds
• Ignoring AISH reporting requirements
• Making payments without understanding benefit consequences
• Failing to invest trust assets prudently
• Treating the trust as informal family money
• Not communicating with the beneficiary or support network
• Ignoring tax filing obligations
• Failing to get advice when unsure

A trustee should understand that they are managing someone else’s money for a specific legal purpose.

Henson Trusts for Blended Families

Henson trusts can be especially important in blended families.

For example, a parent may want to provide for a child with a disability while also providing for a spouse, stepchildren, or other children. Without careful planning, family members may disagree about what is fair or how assets should be divided.

A Henson trust can help clarify:

• What share of the estate is intended for the beneficiary
• Who will manage that share
• How the funds may be used
• Who receives anything left after the beneficiary dies
• How the plan fits with the rest of the estate

Clear planning can reduce conflict and provide more certainty for everyone involved.

Henson Trusts and Family Communication

Estate planning for a loved one with a disability is not only a legal issue. It is also a family communication issue.

If appropriate, it may help to discuss the plan with the proposed trustee, executor, caregivers, and close family members.

This can help prevent confusion later.

Family members should understand:

• Why the trust is being used
• Who the trustee is
• What the trustee’s role will be
• Why the beneficiary is not receiving the inheritance directly
• How the trust is intended to support the beneficiary
• Who to contact after the will-maker dies

Not every detail needs to be shared with everyone, but key people should understand the overall plan.

When Should You Review an Existing Will?

If you already have a will, it may need to be reviewed if you have a loved one who receives AISH or may receive AISH in the future.

You should consider reviewing your will if:

• A beneficiary has started receiving AISH
• A beneficiary has been diagnosed with a disability
• You have named a beneficiary directly instead of using a trust
• Your executor or trustee is no longer the right person
• A family member has died
• You have moved to Alberta
• Your assets have changed significantly
• You have remarried or separated
• You now have a blended family
• Your beneficiary designations do not match your estate plan
• Your will was created using a template
• Your will is many years old

Estate planning should change as your family’s needs change.

Practical Steps for Families

If you want to protect a loved one’s AISH benefits while still providing support, consider the following steps:

1. Confirm whether your loved one receives or may qualify for AISH.
2. Review your existing will and beneficiary designations.
3. Avoid leaving significant assets directly to the beneficiary without legal advice.
4. Consider whether a Henson trust is appropriate.
5. Choose a reliable trustee and alternate trustee.
6. Think carefully about how trust funds should be used.
7. Review whether an RDSP should also be part of the plan.
8. Discuss the plan with key people where appropriate.
9. Make sure your documents are properly drafted and signed.
10. Review the plan regularly.

A well-structured plan can help protect benefits while still improving your loved one’s quality of life.

How Libra Law Can Help

Planning for a loved one with a disability requires thoughtful legal advice.

Libra Law can help families understand how a Henson trust may fit into their estate plan and how to structure wills and trusts in a way that protects the people they care about.

Our team can assist with:

• Wills
• Henson trusts
• Disability-related estate planning
• Trustee selection
• Executor planning
• Estate administration
• Probate-related documents
• Beneficiary planning
• Will reviews
• Trust wording
• Coordination with accountants and financial advisors

Whether you are creating a new estate plan or reviewing an existing will, Libra Law can help you make informed decisions for your loved one’s future.

Visit our Wills and Estates page or contact Libra Law to discuss Henson trust planning in Alberta.

This article is for general informational purposes only and does not constitute legal advice. To obtain advice specific to your situation, please consult a lawyer or qualified professional.

FAQs About Henson Trusts and AISH Benefits in Alberta

What is a Henson trust?

A Henson trust is a discretionary trust often used to support a person with a disability. The trustee controls when and how funds are used, and the beneficiary does not have an automatic right to demand payments.

Can a Henson trust protect AISH benefits?

A properly drafted Henson trust may help protect AISH benefits by keeping assets in trust rather than giving them directly to the AISH recipient. However, trust income and payments must still be handled carefully.

Can I leave money directly to someone on AISH?

You can, but doing so may affect their AISH eligibility or benefits if the inheritance increases their non-exempt assets or income. Legal advice is strongly recommended before leaving a direct gift.

Who should be the trustee of a Henson trust?

The trustee should be someone trustworthy, organized, financially responsible, and able to understand the beneficiary’s needs. In some cases, a professional trustee or co-trustee may be appropriate.

Is a Henson trust the same as an RDSP?

No. A Henson trust is a legal trust managed by a trustee. An RDSP is a registered savings plan for eligible persons with disabilities. Some families may use both as part of a broader plan.