Henson trust or RDSP: which one does your family need?
They do different jobs. An RDSP is a savings plan you open during your lifetime, with government grants and bonds worth up to $90,000. A Henson trust is created in a will to receive an inheritance without putting ODSP benefits at risk. Many families use both, side by side.
Families planning for a loved one with a disability hear two terms over and over: the RDSP and the Henson trust. They are often mentioned in the same breath, which makes them sound like alternatives. They are not. They do different jobs, they are created in different ways, and for many Ontario families the right answer is both. Here is the comparison, in plain English.
Please read this first: this page is general information about how these tools work in Ontario. It is not legal advice, and it is not a substitute for an estate lawyer who knows disability planning. Trusts are legal documents, and the details of your family's situation matter.
The short answer: they do different jobs
An RDSP is a savings plan. It is opened during the beneficiary's lifetime, usually by the person with a disability or a family member, at a bank, credit union, or other financial institution. Its superpower is government money: matching grants and bonds that can add up to $90,000 over a lifetime.
A Henson trust is an estate tool. It is usually created in a parent's will, so that an inheritance lands in a fully discretionary trust instead of directly in their child's hands. Its superpower is protection: assets inside a properly structured Henson trust are generally exempt when Ontario Disability Support Program eligibility is calculated. My full guide to how a Henson trust works covers the trust side in depth.
The RDSP side of the comparison
To open an RDSP, the beneficiary must be approved for the Disability Tax Credit. The plan's holder manages it, contributions can come from the beneficiary or from family and friends with permission, and lifetime contributions are capped at $200,000 per beneficiary. The Canada Disability Savings Grant matches contributions up to $3,500 a year, to a lifetime maximum of $70,000, based on family income. The Canada Disability Savings Bond can add up to $1,000 a year with no contribution required, to a lifetime maximum of $20,000. Grants and bonds are paid until the end of the year the beneficiary turns 49.
For families receiving ODSP, the RDSP's design is the headline: the plan is fully exempt for ODSP, both as an asset while it grows and as income when money is withdrawn. One rule to respect: grants and bonds must generally stay in the plan for 10 years or they may have to be repaid, so withdrawals are planned, not casual. The full picture lives on the Disability Finance hub.
The Henson trust side of the comparison
A Henson trust is a fully discretionary trust, most often set up in a parent's will for a child with a disability. Instead of leaving money or property directly to your child, you leave it to the trust. A trustee you choose manages those assets and decides whether to pay anything out, when, and how much. Your child does not control the trust and cannot demand money from it. That absolute discretion is the entire engine: because the beneficiary does not legally own the trust assets, they are generally exempt for ODSP purposes. The concept comes from an Ontario court case, Henson v Ontario, and it is an Ontario tool; not every province treats trusts the same way.
One caution families miss: assets inside the trust and payments out of the trust are treated differently. What flows out to the beneficiary, and what it is used for, is assessed under ODSP rules in its own right. A good trustee gets guidance before larger payments. Choosing that trustee well is the biggest decision in the whole arrangement, and I cover it in my guide to choosing a Henson trust trustee.
Side by side
- What it is: the RDSP is a registered savings plan. The Henson trust is a discretionary trust, usually inside a will.
- Who creates it: the RDSP is opened during the beneficiary's lifetime, by the beneficiary or a qualifying holder. The Henson trust is created by the person leaving the money, most often a parent, in their will.
- What goes in: the RDSP takes contributions during life, up to $200,000, and attracts grants and bonds. The Henson trust receives inheritances and larger gifts when an estate is settled.
- Who controls it: the RDSP holder manages the plan. The Henson trustee holds absolute discretion, and the beneficiary cannot compel a payment.
- ODSP treatment: the RDSP is exempt as an asset and as income on withdrawal. Henson trust assets are generally exempt, while payments out are assessed under their own rules.
- The key requirement: the RDSP needs Disability Tax Credit approval. The Henson trust needs careful legal drafting that preserves the trustee's absolute discretion.
Why so many families use both
Picture it this way. The RDSP is where steady, planned saving grows over decades, helped along by government contributions. The Henson trust is the safe landing place for a parent's estate or a grandparent's gift, money that would otherwise arrive all at once and put benefits at risk. Neither replaces the other. Together, with proper advice, they can give a person with a disability both a growing nest egg and a protected inheritance. If your family is weighing an inheritance against ODSP, my guide to the RDSP and ODSP is a helpful companion read.
Questions to take to an estate lawyer
A Henson trust should only be drafted by a lawyer experienced in disability estate planning. Go in with questions like these. Who should be trustee, and who is the backup if they cannot continue? How should the trustee be guided on payments, so quality of life improves without putting benefits at risk? What happens to anything left in the trust when the beneficiary dies? And how does the will coordinate with the RDSP the family already has? A good lawyer will welcome every one of those questions.
Planning for a loved one with a disability takes extra steps, and I know it can feel like a lot. But every step you take now is one less crisis your family faces later. That is real love in action.
Common questions
Do we need a Henson trust or an RDSP?
Usually, that is the wrong question. An RDSP is a savings plan opened during your lifetime that attracts government grants and bonds. A Henson trust is set up, usually in a parent's will, to receive an inheritance safely. They do different jobs, and many families benefit from both.
Does an RDSP affect ODSP benefits?
No. The RDSP was designed to work alongside provincial benefits. In Ontario, RDSP savings are exempt for ODSP as an asset, and withdrawals are exempt as income. That design is a big part of why the RDSP is so powerful for families who rely on ODSP.
Does money in a Henson trust affect ODSP?
Assets held inside a properly structured Henson trust are generally exempt when ODSP eligibility is calculated, because the trustee holds absolute discretion and the beneficiary cannot demand a payment. Payments out of the trust are a separate question and are treated under ODSP rules based on their amount and purpose.
Can an RDSP replace a will?
No. An RDSP holds savings for one beneficiary and follows its own rules. It does not decide who receives the rest of an estate, and it does not receive inheritances the way a trust can. Families still need a will, and for a child with a disability, that will is where a Henson trust usually lives. This page is information only, not legal advice.
For the full trust framework, return to Henson trusts explained, the pillar guide for this series.
Sources: Disability Tax Credit, Canada Revenue Agency · Registered Disability Savings Plan, Government of Canada.
See where you stand: the free RDSP readiness checker takes about a minute and shows whether an RDSP fits your situation and what grants and bonds could add. No signup, and no pressure.
A quick note: this post is educational, not financial advice. For guidance on your own situation, book a free conversation. You don't have to figure this out alone. I'm here to help you through every step.