Estate Planning for Parents of the Disabled


Parents and grandparents of children with disabilities are often faced with an estate planning challenge. 

There is a general desire to be fair and to include disabled children in the division of the estate, if not equally then based upon “need”.  It is natural to want to provide for children or grandchildren based on their (in)ability to fend for themselves.

However, large gifts of cash or property to the disabled can result in loss of government benefits and other entitlements.


There is a complete spectrum of disabilities which runs from physical to mental and mild to severe.  Capacity issues arise where a person lacks mental capacity to manage money or create a will.

If an individual lacks mental capacity to manage finances, then any funds should be placed in a trust and not gifted directly.  This can also apply to beneficiaries who are capable but are not financially responsible (eg. drug addicts, gamblers and others may be susceptible to bad influences).  

A person who lacks the capacity to manage finances on their own requires a Power of Attorney (POA) for Property.  This document appoints someone else to manage the property on their behalf and can be executed while legally capable.

If a person lacks capacity to execute a POA for Property, a court application will be required.  This guardianship application will be focussed on protecting the incapable person and a court will adequate documentation and proof of this protection. 

Having a POA or a court appointed guardian protects the incapable person and opens up ability to access additional benefits through RDSPs and other financial management.

A related consideration is whether the disabled person has (or will every have) the mental capacity to execute a will.  If not, they will eventually die intestate.  The results of intestacy are set out in law and can also be controlled on some assets through beneficiary designations.


Some disabilities entitle a person to financial and other benefits such as subsidized housing or access to rehabilitation or educational programs. 

An inheritance or any other sudden infusion of money, such as a gift or a lottery winning or even a personal injury settlement could disentitle the person to some or all of such benefits including the right to continue to live in subsidized housing.

Government benefits may “clawed back” or suspended and may not be restored until the new funds are exhausted at which time the individual may be placed on a wait list to get back into programs or assisted housing.

As a result some people reluctantly leave disabled family out of a will.  However, there are estate planning opportunities for providing benefits to disabled family.


A Registered Disability Support Plan (RDSP), is a savings plan which is intended to provide a stream of income at a later date (similar to an RSP).   A good financial planner can provide advice on limits and strategies for deposits and withdrawals and the applicable lifetime maximum.   Contributions can be made by anyone on behalf of the disabled person. 

Annual deposits may be eligible for double or even triple matching by the government which results in yields of up to 300%.  RDSPs grow tax-free and are taxed when withdrawn.

Parents or grandparents can deposit to an RDSP as part of an estate plan and this can be done in a will or while alive.


Parents and grandparents can include a specialized trust for the disabled person in a will which is sometimes known as a “sprinkling” or a “Henson” trust, because the trustee can choose to “sprinkle” some benefit on the beneficiary or not.

This is a trust which gives the trustee complete discretion to make payments (or not) to the disabled person or to others.

The trustee can consider government clawbacks and eligibility for social benefits or other requirements to provide maximum benefit to the disabled person.  The trust can also purchase goods or services for the benefit of the disabled person.

This trust can also work well for spend-thrifts, gamblers, drug-addicts and others who may not be financially responsible.


Prepared by Ismail Barmania of Barmania-Lawyers