Should a disabled adult child be named directly as a life insurance beneficiary or should the money go into a trust?

If your adult child receives ODSP or similar means-tested benefits, naming them directly as the life insurance beneficiary generally isn't the best approach, because the lump-sum payout would typically count as their personal asset and could put them over ODSP's asset limits, reducing or suspending the very support you're trying to protect. Directing the proceeds into a properly drafted discretionary trust, commonly a Henson trust, instead is the approach most families use to avoid that outcome, since a trustee's absolute discretion over payments generally keeps the trust property from being counted as the beneficiary's own asset.

To make this work, the trust, rather than your child personally, generally needs to be named as the insurance beneficiary, or your will needs to direct proceeds payable to your estate into the trust you've established. Simply hoping a sibling or other family member will informally manage a direct payout doesn't provide the same protection or legal structure.

If your adult child doesn't rely on means-tested benefits, this calculation changes, and a direct designation may be entirely appropriate. Because the right answer depends on your child's specific benefits and circumstances, review your beneficiary designations with a lawyer before finalizing them.