Retirement » Government Benefits

Henson Trusts, The Ontario Disability Support Program (ODSP) benefits and tax credits

Sometime ago I began a very fruitful dialogue with Kenneth C. Pope, LLB, a lawyer in Ottawa, Ontario. He is one of the most experienced legal practitioners in Canada providing services to families with a family member with a disability and has focused his professional career to help them put in place Henson Trusts.

What I would like to share with you in this month’s article is a recent talk I had with Kenneth Pope where we discussed Henson Trusts, ODSP and other tax credits that families and disabled individuals can benefit from but are often unaware.

The interview:

Merrick: “What is ODSP?”

Pope: “ODSP stands for The Ontario Disability Support Program. The Ontario Misistry for Community and Social Services describes it as program that is designed to meet the unique needs of people with disabilities who are in financial need, or who want and are able to work and need support. Other procinces have similar disabled support programs”

Merrick: What happens if a family member with special needs is receiving Ontario disability support benefits and then he/she is left an inheritance? Will that inheritance be considered an asset and disqualify them from benefits?”

Pope: Yes, The family member if left an inheritance will be not be eligible for benefits such as the ODSP unless special arrangements are made in the parents’ Will.

Merrick: “Are there any solutions for parents and guardians of persons with special needs that will allow them to leave an inheritance and not disqualify the disabled individual from receiving disability benefits from the government?”

Pope: “Yes, the only real solution to this inequity is a HENSON TRUST, created by the parents’ Will. Only available since 1989, when the case after, which it is named was upheld by the Ontario Court of Appeal, it places estate assets in the care and control of a Trustee to be administered for the benefit of a beneficiary. Inheritances placed in a properly prepared Absolute Discretionary Trust are not the asset of the child and will not affect provincial benefits.

Merrick: “What are the motivations that cause parents and guardians to setting up a Henson Trust?”

Pope: “Many families have members who require assistance in handling their daily affairs, regardless of their other abilities. Special Beneficiaries often benefit from guidance in handling large sums of money or significant assets, temporarily or on an on-going basis. Some beneficiaries may be unable or unwilling to seek guidance, and may at some point be left without care unless special provisions are put into place.

To solve these problems a Henson Trust must be created during a parent’s or guardian’s lifetime (inter vivos) or according to the terms of parent’s or guardian’s Will (testamentary). These Trusts are invaluable in planning for a child’s care when a parent or guardian are no longer there.

Merrick: Why do some people receiving Ontario provincial disability benefits receive $730 each month while others receive $959?

Pope: “The $730 amount is the ‘room and board’ allowance. If a child lives with the parent they will automatically be slotted into this amount. The $959 amount is composed of $427 for shelter/rent and $532 for supplementary benefits for everything else.”

Merrick: “Do you recommend strategies that will allow individuals to receive the full amount?”

Pope: “A simple method to receive full benefits is by setting up a lease arrangement with the parents and having the parents charge at least the shelter allowance amount. The benefits should then be increased to the proper amount. These shelter payments by a blood relative are not to be included as “rental” income. Rental losses are not allowed if your rental operation is a cost-sharing arrangement rather than an operation to make a profit.

You can deduct your expenses only if you incur them to earn income. In certain cases, you may ask your son or daughter, or another relative living with you, to pay a small amount for the upkeep of your house or to cover the cost of groceries. You do not report this amount in your income, and you cannot claim rental expenses. This is, in fact, a cost-sharing arrangement, so you cannot claim a rental loss.

The child cannot then make use of the “tenant property tax” credit.

If the child is simply unable to shop or cook, even with supports, then the increased amount may be unavailable on the basis that the food and lodging is provided by the parents. This turns on the facts of each situation.”

Merrick: “Many people have heard about the ‘caregiver credit’ used by some families to reduce taxes. When does this apply?”

Pope: “If a child is over 18 years of age, on ODSP and resides full time or substantially all of the time with the parent or other family member, then the family member qualifies as a care-giver of that child. They can then claim the ‘care-giver tax credit’ and pay approximately $500 less in taxes than they would have.

This credit applies in each ongoing year in which these factors exist. The credit came into effect in 1998, and can be back filed to that year if applicable. This would return approximately $4,500 in taxes for a back filing from 2006.

This tax credit applies in the circumstances of any adult family member, not just children, for example an aged parent who survives on a small pension and who has been released from hospital after an operation.

Merrick: What is the ‘disability tax credit’? I know some parents save on taxes by using this tax credit and others have never heard of it.

Pope: This tax credit is available whenever a child of any age is markedly restricted in the activities of daily living on an on-going basis.

The restrictions can be cognitive, developmental, physical or mental, or a combination of disabilities. This tax credit must be applied for and approved, by filing a T-2201 form with Canada Revenue Agency.

Once approved, the credit is transferred from the child who qualifies to a parent or other supporting person. The tax credit is only useful to someone who pays taxes, and in many cases the person with the disability has no taxable income.

The credit was recently increased, and now returns $1,500 each year to a taxpayer who makes use of it. It can presently be back filed to 1996, back ten years on a rolling annual basis.

Note: In years prior to 2001 the tax credit only returns $1,000 per year, as that was the previous allowance. Back filing for the full period, if applicable, in 2006 would return approximately $14,000 to the taxpayer.”

The bottom line

Henson Trusts, ODSP, Benefits and Tax Credits are special arrangements necessary to properly ensure that loved ones of clients are given the extra care they deserve, and that inheritances will not be wasted. One can just imagine the potential liability someone who puts himself or herself out in the public domain as a client’s advisor could be who ignores the options available for clients who are parents or guardians of children with special needs.

If you believe a client would benefit from adopting any of the strategies mentioned above it is important to seek specialized legal counsel and the proper financial planning professionals will assist in setting up and managing the right plan for your clients who care for children with disabilities.


  1. Steve Haslehurst

    I receive C.P.P. disability benefits, as well as O.D.S.P. benefits. The amount I receive from C.P.P. benefits, is deducted off my O.D.S.P., which I don.t have a problem with. The problem I have, is the fact, other people I know, who are receiving O.D.S.P. benefits receive a start-up allowance every two years. Now with this being said, I tried to get a start-up allowance (Its been a little over two years) and was denied this benefit. I know for a fact, there is a tenant, residing in the same apt. building as myself, moving to another apt., in the same building, who applied for a start-up allowance and received it. How is this fair to other people on O.D.S.P. benefits? I myself, took a reduction in rent, to be the Superintendent of the apt. building. When I asked my worker about a start-up for clothing, I was out right denied. Can you please email me what page and subsection, under the Ontario Disability Support Plan where it states the requirements for the start-up allowance. Than-You

  2. Marg McMNutt

    I would like to know what percentage of the amount that is calculated as a refund do you take?

  3. abilitytax

    This is great! I am going to recommend this to all of my clients. Thanks for the informative post.

  4. Rob Hawthorne


    I receive ODSP. I inherited about $300,000 from a
    will. Is it possible to deposit about $200,000 into
    a Henson trust, and the other $100,000 into some type of sheltered trust ? I’m asking this because if it’s all deposited into a Henson trust, I’d only
    be able to withdraw about $7000 a year. Whereas with the money that’s in the sheltered trust I
    wouldn’t have any restrictions as to how much I could withdraw.

    • Angie

      That is a VERY good question. Did you ever find out?

  5. Ken Pope

    Dear Rob I’m glad you found my website and submitted your questions directly, but I thought it would be generally useful to reply here as well.

    There are various ways to shelter or exempt $300,000, but the choices depend on your particular circumstances. You can’t now set up a Henson trust yourself.

    We use inheritance trusts, exempt asset investments, RSDPs, exempt property purchases, pain and suffering amounts and other methods to exempt the money.

    Now that I’m back from holidays, and when you fill in the Evaluation Form on my website, I’ll be glad to reply with more detail about your own situation.

    Best, Ken Pope

  6. Rob Hawthorne

    The will actually states that the money I’ve inherited is to be deposited in a Henson trust which
    has already been setup for me. My sister who is the
    trustee for me wants to buy GIC’s for me with the
    money that sits in the Henson fund. The ODSP rules
    that I’m under state that GIC’s are not an exempt
    asset. What should I do ?

  7. terry

    i am buying a house that the current tenant has been willed the right to stay in the house as long as she wants as long as she pays rent from her odsp and also pays for utlilties
    the current owners (dad died) want to transfer to me opon sale the tenancy agreement of the will
    is there a way to dislove this as the 709 rent she pays should be 1200+ how can evict her
    thks terry

    • Angie

      You can raise the rent a certain amount every year and ODSP will cover that. $709 is low and I believe they will cover up to $900 but you have to raise it only the allowed amount every year and not jump the rent up to $900 at once. You would have to verify this as I am only speaking from what I know from being on ODSP myself..

  8. toby barlett

    Presently receiving cpp disability. Can i rent out my basement apartment for extra income or will cpp disability consider this income… Would my cpp disability be reduced or eliminated

    Thanks so much

    • Angie

      I believe it would be considered an expense. Even though I am not on CCP but ODSP I remember that I had to claim what someone was paying me in rent for them living in the 2nd bedroom of my first place I rented on my own after no longer living with my parents. Things could have changed since then however..

  9. Donita Marrinan

    I agree with you, but i don’t realised your summary. Could you expand it, please?

  10. Muhammad Malik

    Hi, I like gain some information. Please send me a reply ASAP.
    My late wife was on ODSP. We were living in a Peel Rent Supplement apartment. Do survival spouse has any right to live in the same apartment? Surviving person is also having jobless and 57 years old and getting OW (Welfare) from peel Region.
    Please reply me in detail…..Is Henson can help me in this situation ?
    Thank you

    Malik Muhammad

  11. Anthony Sytsma

    Mr.Pope-this posting is a Godsend for me….I am a sr.76 yrs of age…have an Autistic son who is now 52 years of age! Very difficult to employ is basically self-sufficient but difficult to find employment because he is so precise and slow. Befor my death…i want to have everything in order for him, currently unemployed and receives nothing at this point. Please help me, i need legal advice in the Toronto area to get your article mentioned benefits in place for my son! He is an awesome man and has spent his freetime volunteering for the NCIB…sailing, skiing, walking, biking etc.

    A loving father who is extremely concerned and wants to everything possible for my son!

  12. Anthony Sytsma

    should read CNIB

  13. cathy g

    im on disibilty and on odsp im in a nursing home and my mom just past away im on both my mom and dads will but this gets real confusing for me im the only child and my dads in a nursing home also he has demetia and he doesnt know who i am i sold there house privately and i dont want to lose my odsp cause of this what do i need to do since im sole server on wills but money goes in dads name and i can pay bills with but when he dies than i get money and i dont want to lose odsp please help me

    • Alina

      I dont have a good relationship with my both parents and my sister my dad takes away my income that I get when I was working but they never touch my sisters.income even if she lives at home a d doesn’t pay rent. my and I gladly give it to him cause he abuse me and manipulate me cause I live in their house. Now he told me I can’t collect 0w if I live with them but when I lived with my bf he never asked me to give him my ow money. Now since my bf abuse me by kicking me out to live on the streets my dad refuses to let me live with him and collect my ow. He tells me that any income I receive from now I have to give it to him cause he is punishing me for not living with my boyfriend that abuse me. I applied for odsp a d they told me I did not even apply and to start all over and one year has passed. Is there any legal help that can help me with disability and wills my father told me that he would give everything to my sister when he died and that i dont deserve anything but him and my sister manipulate me and takes my income from me by threatening me by calling the cops to the house. I moved with them in July since my mom told me I can come back home. I just do not know why my dad wants to take my shelter money and keep it to himself and abuse me like that and where my money is going to go.

  14. Keith

    Mr Pope. Just read your article on the Henson trust, I just had a heart attack and I need to set up a Henson Trust for my diasable son in quebec.
    Can you please give me some ideas or contacts where I can start.
    Thanks Keith D.

  15. Suban

    my question is that if a person receiving ODSP &CPP-D living with family but if a his spouse left him & don’t want live with the main applicant so in that situation the main ODSP Applicant ODSP &CPP-D benefits will reduce or stop or only the cut off benefits of his spouse?
    Kindly answer.


  16. Sam

    Wonderful. Now if only I had anyone in my life who could leave me an inheritance.
    ODSP is so unfair. I was told, as a single parent with a child, that I could receive up to $4000 in ‘gifts’. Great, I said; do you know anyone who would like to give me that kind of gift? To rub salt in the wound, my odsp workers would tell me this over and over again.
    Not all of us have financially supportive family members. Not all of us have gifts of apartments, cars and gas, etc. ODSP is all we have, it’s not enough to live on, and I’m sick of it.
    Since Harris reduced the benefits by 20%, there are people like me who struggle to survive, month after month, year after year. This stressful situation only keeps us sick.
    Something needs to change.

  17. Carrie Flanagan

    I have a daughter who is 6 yrs old. Her father is in receipt of ODSP for his entire lifetime. He is not required to pay child support because of this. His mother set up the Hensen fund for him and left a large sum of inheritance to be paid to him throughout the years. My question is, is he required to pay child support now that he has the Hensen fund or is he still considered exempt? Currently in a family court in Ontario where this has come up, any information would be helpful.
    Thank you,

  18. Angela Browne

    I can certainly relate to the post by SAM.

    I have no family either. I am dead to them, as far as they are concerned and I certainly don’t anticipate getting any inheritances.

    Yet I am married to a man on ODSP, who cannot work at all or contribute to the household costs, and he being a hoarder has made our house (which we own) in a mess, which I cannot afford to fix. Yet ODSP takes more than 50% of what I earn off his cheque, leaving us with very little.

    It’s nice to know that some people can get $6,000 in “gifts”, but I can’t earn that $6,000 a year clear for all three other members of my benefit unit to do this, without losing most of it. Why is effort on my part punished, but selective charitable gifts exempted?

  19. Louise P.

    If you are on ODSP and receive an amount money (less than $50,000)as a result of a sexual-abuse settlement, does ODSP have the right to these monies? Does a Hansen trust need to be set up for this type of settlement?

  20. Lorne and Gail Clark

    Henson Trust

    We have established a Henson Trust for our son and we are trying to determine exactly which of his future expenses can be paid from the trust.

    We note there are 3 categories of payments allowed
    – disability related services, education or training
    – other purpose up to $6,000
    – RDSP investments

    A few specific questions:
    1. Is the maximum annual withdrawal $6,000 for other expenses plus any eligible amounts defined by the other two eligible categories?

    2. Can the trust be utilized to supplement rent or living costs in excess of the $6,000 other amount?

    3. Can a lump sum of money from the Hensen trust be accessed to purchase a residence for him?

    4. Can he own his own residence without ODSP penalties applying?

    Thank you for your consideration.

  21. Michele S

    Henson Trust.
    My father died many years ago and left a Henson Trust for my brother, which I am the trustee for. We discontinued ODSP because it wasn’t worth the hassle with those people and he’d be over the $6000 threshold very quickly at the beginning of the year.

    Here’s my question/dilemma: The henson trust earns income. My accountant suggested we take that income and report on my brother’s personal income tax. To make matters worse, because of some recent CRA rules we ended up having to report 2 years at once, greatly inflating his income.

    As a result Trillium has increased their deductible so high that it doesn’t make any sense to pay it. We will just pay prescription meds as they come up. However, we are concerned over his CPP. He’s been getting a monthly payment for over 30 years. I’m concerned that CRA will look at this year’s reported income and say he no longer qualifies do to the income he reported (when in fact the money isn’t from working, it’s interest earned from the henson trust). Is this a possibility?

    Last question if he is successful getting the disability tax credit, will this inflated income work against him?

    Thank you of your time.

  22. Sarah

    My sister has been left with a Henson trustee, (another family member) that she has never gotten along with.
    And vice versa.
    This trustee is also the executor of the will, and a beneficiary.
    Can my sister be reassigned a new trustee by the court?
    And by what action?
    Also, how can the trustee relinquish the position?

  23. Catherine H

    My son, age 40 suffers from chronic mental health issues that render him unemployable. He has spent time involuntarily in a psychiatric hospital due to psychosis , depression and suicide attempts. He no longer sees any doctors & refuses to take any medication. We, his elderly parents support his every need including a small handyman business. Related to this business, we incur significant annual costs for his truck,insurance, tools & equipment and advertisements. Although he makes very little income from the work, it is well worth the effort as it gives him some dignity and improves his mental state. To help with our financial burden, we have urged him to apply for ODSP as well as the disability tax credit. His response – ” what are you crazy, there is nothing wrong with me! And besides, I would never let the government label me. I would rather die than be a welfare case.” We have explained to him until we are blue in the face that ODSP is not welfare and that he has medical needs that warrent this support. These discussions only lead to further stress and immense conflict in our household. As you a are no dought aware, it is not at all uncommon for a person who suffers from mental illness to be in total denial of their condition. Is there any way around this that would allow him to receive this support without his consent.? Thank you for your time. Catherine H

  24. Angie

    Thank you for this information. I had a friend died after she lost her ODSP because her father had her in his will and she was his executor but did not know about the Henson Trust. She lost her coverage and without the coverage she couldn’t afford the care she needed and ending up dying from Liver Failure. Now because I am on ODSP myself .. I looked this up after all that happened to protect myself and found your website. Thank you Peter Merrick for this information.


    My inheritence is in a hanson trust and I recieve nothing from it. the money held in the trust the trustee uses it to pay for the expenses that I can not afford to pay myself from my monthly Odsp cheque. Why would Odsp ask the trustee for the expenses I myself are paying monthly from my ODSP CHEQUE. SHOULD THEY RATHER ASK WHAT EXPENSES THE TRUST IS PAYING FOR ME.

  26. Brett Barager

    Interesting and helpful information . . . however: the spelling and grammar is terrible! Seriously, I see so many articles, stories, etc. these days with very poor grammar and spelling. If you need a proof reader, let me know!

  27. Nahid

    Hello, I would like to discuss the situation of my 14 year old son regarding his future with someone i appreciate if you call me on 647 907 3937 or send me an email including a phone number so that i can speak to someone directly.

  28. Mary Bradfield

    I am finalizing my will and want to leave my daughter who is on ODSP an inheritance which would be approximately 300,000 dollars. My lawyer has recommended I put the money in a Henson trust but bottom line after reading a lot of material, how do I ensure that she will actually be able to receive all of the money either monthly or yearly, however it would work, without it ever affecting her ODSP? I just want to make sure that she receives all of her inheritance. Also if she is the beneficiary of my life insurance policy of 50,000 would that affect her ODSP and how would I ensure she safely can receive that money as well?

    • Ferrucciocapone

      When I turn 65years old and I get oas gis cpp and get less than odsp and qualify for extended health benefits does it effect money I take out of the Hudson trust fund when I turn 65years old

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