What happens to a child's RDSP when a parent holder ages, loses capacity, or dies?
An RDSP must always have a qualified holder, so when a parent holder dies or cannot continue, a successor has to step in or the plan stalls: contributions pause and grant and bond money can be delayed. Planning the handover early, through wills, honest conversations, and sometimes a Henson trust, keeps the support running smoothly.
I talk with a lot of parents who opened a Registered Disability Savings Plan years ago for their adult son or daughter, and you can hear the love in every detail. They remember the first contribution and the relief of building something that would last. Then I ask a gentle question that usually brings a long pause. What happens to this plan when you are no longer able to look after it? It is not a comfortable question, but it might be the most important one in the whole plan.
Why the holder matters more than most families realize
Every RDSP has a beneficiary, the person with the disability the plan is for, and it also has a holder. The holder makes decisions, directs contributions, and deals with the financial institution. For many families, a parent is the holder and has been from day one. The challenge is that an RDSP must always have a holder. It cannot drift along on its own. If there is no qualified holder in place, the everyday work can stall. Contributions may be paused, grant and bond money can be delayed, and simple questions become hard to answer because nobody has clear authority to act.
What happens if a holder dies or cannot continue
Life does not always give us a warning. A holder can pass away, develop a health issue, or lose the capacity to manage financial decisions. When that happens, a qualified successor holder or a legal representative needs to step in so the plan can keep running. That sounds straightforward on paper, but it can take time to prove who has legal authority to act, gather documents, and get the new holder recognized by the institution. Preparation while everyone is well can shorten that gap considerably.
The conversation to have while everyone is healthy
The best handover plan starts with a conversation, not a form. Sit down with the person who would step in one day and talk openly about what the RDSP is, why you opened it, and what you hope it will do for your child. Tell them where the plan is held, which institution to call, and where you keep statements and important letters. Also talk about the beneficiary's own wishes and abilities. Some beneficiaries manage much of their own money and want a strong voice in decisions. Others need more support. A good plan respects that reality, so the next holder is guided by your knowledge, not by guesswork.
How estate planning and the RDSP fit together
Your RDSP should not live in a separate drawer from your estate plan. The two need to speak to each other. When you review your will and your powers of attorney, ask whether the RDSP is mentioned, whether the right people know their future roles, and whether they are willing and able to take them on. A sibling or a trusted family friend might be the right backup. There is no single right answer, only the answer that fits your family. If you are starting from the beginning, our guide to will basics in Canada is a helpful place to get oriented. This article is educational only, so treat it as a starting point for a conversation with professionals who know your situation.
The RRSP to RDSP rollover many parents miss
There is another piece many parents have never heard about, and it is worth asking about early. In certain circumstances, when a parent or grandparent passes away, money from their RRSP or RRIF, or certain pension amounts, may be transferred on a tax deferred basis into the RDSP of a child or grandchild who was financially dependent on them because of an impairment. It is not unlimited. The amount is tied to the beneficiary's available RDSP contribution room, and the RDSP lifetime contribution limit of $200,000 still applies. Rules around eligibility and timing matter and can change, so check current rules with a professional before counting on this strategy. For the right family, it can direct retirement savings toward long term support for your child.
Pairing the RDSP with a Henson trust
An RDSP is powerful, but it cannot hold everything. The lifetime contribution limit is $200,000, and many parents also want to leave a home, other savings, or a larger inheritance. That is where a Henson trust, set up through a will, often comes in. A properly drafted Henson trust can hold assets outside the RDSP and give a trustee discretion over how money is used to support your loved one. In Ontario, it is often used with the goal of protecting eligibility for programs such as the Ontario Disability Support Program, although rules differ by province. Used together, the RDSP and the Henson trust can cover different needs and different kinds of assets. You can read more in our article on Henson trusts explained. This is general education, not legal advice, and drafting should be done with a lawyer who understands disability planning in your province.
If you are a parent reading this and feeling a little uneasy, please hear this first. Thinking about the handover at all puts you ahead, and it says a lot about how much you care. You do not have to sort it all out this week. Start with one conversation, one list of where things are, and one review to make sure the RDSP is named in your broader estate planning. Small, clear steps taken while life is calm are a gift to the people who will step in later, and to the son or daughter at the heart of the plan. That is what this is about: peace of mind, knowing the support you built with so much love will keep doing its job.
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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.