Financial Planning for a Special Needs Dependent in Ontario

Planning for a child or dependent with a disability is one of the most emotionally weighted and financially complex challenges a family can face. The stakes are high, the tools are specialized, and the planning can't be put off — because if something happens to you without a plan in place, the people you're counting on to protect your loved one may not have the legal or financial means to do so effectively.

In Ontario, there are specific registered savings vehicles, trust structures, and government support programs designed to support families in this situation. At Pineault Wealth Management in London, Ontario, Marc Pineault works with families who have special needs dependents to help ensure their financial plan provides long-term security for everyone who matters to them.

The Core Challenge: Benefit Clawbacks

The foundational problem in planning for a person with a disability in Ontario is that many government benefit programs — particularly the Ontario Disability Support Program (ODSP) — are means-tested. If a person with a disability inherits money directly, it can push them over the asset threshold for ODSP eligibility, causing them to lose benefits they depend on.

This means leaving money directly in a will to a special needs dependent can, paradoxically, harm them in the short term by eliminating income and support they currently receive. Proper planning routes assets in ways that preserve those benefits while still providing for the individual's long-term wellbeing.

The Registered Disability Savings Plan (RDSP)

The RDSP is a federal registered account designed specifically for Canadians with disabilities who are eligible for the Disability Tax Credit (DTC). Contributions grow tax-sheltered, and the federal government provides two forms of matching support:

Canada Disability Savings Grants (CDSG): The government matches contributions at rates ranging from 100% to 300% depending on family net income, up to $3,500 per year, with a lifetime grant maximum of $70,000.

Canada Disability Savings Bonds (CDSB): For lower-income families, the government deposits up to $1,000 per year into the RDSP even if no contribution is made, up to a lifetime maximum of $20,000.

RDSP assets and income do not affect ODSP eligibility, making it one of the most powerful planning tools available. Anyone who is eligible for the DTC and not yet 49 years old should seriously consider opening an RDSP — even if contributions are modest, the government matching alone is significant.

Withdrawals from the RDSP (called Lifetime Disability Assistance Payments, or LDAPs) are structured to begin by age 60. Early withdrawals come with claw-back provisions on grants and bonds received in the prior 10 years, so planning around the timing of withdrawals matters.

The Henson Trust

Named after a landmark Ontario court case, a Henson Trust is a fully discretionary trust designed to hold assets for a person with a disability without those assets being counted toward their ODSP asset limits.

The key feature of a Henson Trust is that the beneficiary has no legal entitlement to any specific amount — the trustee has complete discretion over when and how much to distribute. Because the beneficiary cannot demand payment, the assets in the trust are not considered "available" under ODSP rules and do not trigger benefit loss.

A Henson Trust can be established through your will (a testamentary trust) to receive your estate assets upon your death, or during your lifetime as an inter vivos trust. It requires a carefully chosen trustee — someone who understands both the financial and personal needs of the beneficiary and who will manage distributions in the beneficiary's best interest over potentially a very long time horizon.

Key planning considerations for a Henson Trust:

• The trust must be truly discretionary — any guaranteed or fixed payment schedule can compromise its legal status
• Trustee selection is critical and often involves naming a trust company or a combination of trusted individuals as co-trustees
• The trust document should include clear guidance about the beneficiary's needs, values, and lifestyle preferences — not just financial instructions

A Letter of Intent

A Letter of Intent is not a legal document, but it's one of the most important things a parent can create. It's a detailed personal guide for whoever will be responsible for your child after you're gone — describing their daily routine, communication style, medical needs, preferences, relationships, fears, and what makes them thrive.

Trustees and guardians can manage money and legal responsibilities. A Letter of Intent gives them the human context they need to actually make good decisions on behalf of your loved one.

Building the Full Plan

Planning for a special needs dependent touches on estate law (trust drafting), federal tax (DTC, RDSP), provincial benefit programs (ODSP), insurance, and guardianship — a genuine multi-discipline exercise. At Pineault Wealth Management, Marc Pineault coordinates with families and their legal advisors to ensure the financial planning layer of this work is integrated and sound.

If you have a child or dependent with a disability and haven't yet formalized a financial plan that addresses their long-term security, this is the most important planning conversation you can have.

Book a consultation with Marc Pineault

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.