The Importance of Estate Planning While on ODSP

As I was growing up, I always associated “estate planning” to older adults that were concerned about leaving their estate to their family.  Once I entered the financial services industry, I discovered how important estate planning is and how life insurance integrates into the financial plan.  Essentially, estate planning is the process of transferring assets from one individual to another when the owner of the asset passes away.


Estate planning is essential when there is a family member who is receiving financial assistance through the Ontario Disability Support Program (ODSP) because their financial assistance will either be suspended, delayed, or cancelled if they receive an inheritance because of a family member passing away.


Fortunately, with a proper plan in place their benefits will not be affected.  The Ministry of Children, Community and Social Services who administers ODSP allow recipients to own certain assets which are rereferred to as “exempt assets.”  An individual can possess assets (cash in a bank account and other investments) of $40,000, $50,000 for a couple, $500 for each dependent child, discretionary income of $6,000 per 12-month calendar year and one motor vehicle, regardless of value.  A second vehicle can be owned if the value does not exceed $15,000 and the purpose of this vehicle is to maintain employment for the dependent of the recipient.


Having an up-to-date will is vital for estate planning.  You will want to investigate a Henson “Discretionary” Trust which is an arrangement in a will.  The purpose of a Henson Trust is to allow assets to be held inside a trust for the purposes of the beneficiary.  The trustee who administers the assets of the Henson Trust has discretion how the assets are administered.  There are some limitations where the funds inside the trust must be spent for a disability-related expense for the individual who has the disability or to supplement the discretionary income.


An individual can be the beneficiary of $100,000 life insurance policy with the proceeds going towards a disability-related expense or to supplement the discretionary income.


The Registered Disability Savings Plan (RDSP) is another estate planning tool which was developed by the government to assist individuals, who qualify for the Disability Tax Credit (DTC), and their families to save for their future.  There are several benefits to opening an RDSP such as, the government will contribute up to $70,000 in grants and up to $20,000 in bonds until the beneficiary turn 49 years old, anyone can open an RDSP on behalf of the individual who has the Disability Tax Credit (DTC), when the beneficiary turns 60 years old and must start withdraws, they can be spent on whatever they wish.  An individual who supports an ODSP recipient can have their RRSP/RIFF rolled over into the person’s RDSP when they pass away.  When the roll over happens, taxes are not paid.  This would provide more money for the beneficiary. 


I would be happy to discuss these estate planning strategies with you.



Dave Copeland is a financial advisor with Monarch Wealth Corporation, a Mutual Fund Dear, specializing in the special needs market.  The information derived from this blog comes from the Ministry of Children, Community and Social Services policy directives.