Henson Trust Definition:
A discretionary trust for a person in receipt of social assistance or disability benefits designed to top-up that person's income but without making them ineligible.
Persons in receipt of social assistance or disability-related welfare must declare any other income and generally will see their benefits reduced by any income received from outside sources. Thus, setting up a trust for such a person can seem unproductive. Most, but not necessarily all governments will allow a person in receipt of such social assistance to receive a specified amount of income without deducting their receipt of public funds. Or the government program will exempt certain payments if in regards to the health needs of the beneficiary.
Usually, there are strict trust terms associated with this and they have become known as Henson trusts.
Typical conditions include that payments from the trust be at the discretion of the trustee and not at the demand of the beneficiary.
The trustee manages the Henson trust ensuring that general payments do not exceed the stipulated amount or that they are dedicated towards exempt expenses.
Henson trusts are politically controversial as it allows indirectly what ought to be avoided directly: if a person - disabled or otherwise - has other sources of income, he or she ought not to knock on the door of public funds for money. Further, the exempt categories are often wide. For example, a trip to a spa or a new car might qualify as an exempt payment to a beneficiary if related to health generally.