Will a direct inheritance disqualify my adult child from ODSP if I don't set up a Henson trust?

A direct inheritance paid outright to your adult child can put them over ODSP's asset limits, since ODSP is a means-tested program and money paid to them personally is generally treated as their own asset. Without some kind of trust or planning structure in place, even a well-intentioned gift can end up reducing or suspending their benefits until the inherited amount is spent down or otherwise dealt with.

A Henson trust — a fully discretionary trust where the trustee, not the beneficiary, decides if and when to pay out funds — is the tool most commonly used in Ontario to avoid this outcome. Because your child has no enforceable right to demand payment from the trust, the trust assets generally aren't counted as their personal asset for ODSP's means test. The trust still needs to be drafted correctly, with genuine trustee discretion and no language creating a fixed entitlement, for this protection to hold up.

Before finalizing a will or beneficiary designation that leaves money to a child receiving ODSP, it's worth speaking with a lawyer about whether a Henson trust, or another protective structure, fits your family's situation, since getting the drafting wrong can undo the protection you're trying to create.