If your client has a disability, they may be eligible for the Registered Disability Savings Plan (RDSP). The RDSP is owned by the individual for whose benefit it was opened, and this person is considered the beneficiary.
However, the beneficiary may not always be the best person to manage the RDSP. In such cases, an RDSP can still be established with someone else appointed as the Holder of the RDSP.
The Holder is responsible for managing the plan, including making decisions about investments and payment options. An RDSP must have both a beneficiary and a Holder. Nevertheless, if the Holder and the beneficiary can be the same process if the beneficiary is contractuallu competent.
Who Can be Holder? | Beneficiary | Legal Parent | Qualifying Family Member | Legal Representative |
Beneficiary is under age of Majority |
| Yes |
| Yes |
Adult Beneficiary - Not Contractually Competent |
|
|
| Yes |
Adult Beneficiary - Contractually Competent | Yes |
|
|
|
Adult Beneficiary - Contractual Competence in doubt |
|
| Yes |
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The beneficiary of an RDSP is the individual for whose benefit the plan is opened. They must:
Be eligible for the Disability Tax Credit (DTC), unless the RDSP is being transferred from an existing plan to a new one.
Possess a valid Social Insurance Number (SIN).
Reside in Canada at the time the plan is initiated.
Be under the age of 60, as plans can be opened until the end of the calendar year in which the individual turns 59. This age limit is not applicable if the RDSP is being opened as a result of a transfer from the beneficiary's previous RDSP.
A beneficiary is permitted to have only one RDSP at any given time.
The holder is the person who establishes the RDSP and is authorized to make contributions to it on behalf of the beneficiary.
The holder can be:
The legal parent of the beneficiary.
The guardian, tutor, or curator of the beneficiary, or another individual who is legally empowered to act on behalf of the beneficiary.
A public department, agency, or institution with legal authority to act on the beneficiary's behalf.
Provided all conditions are satisfied, there can be more than one holder for an RDSP at any time.
Qualifying Family Member is the legal parent of the beneficiary or a spouse or common-law partner of the beneficiary who is not living apart and separate from the beneficiary because of a breakdown of their marriage or common-law partnership.
RDSP Account Opening
The general process to open an RDSP for a beneficiary who is not contractually competent is the same as opening any other RDSP (see the RDSP account opening instructions here).
Please note the following in regard to the application forms for a contractually incompetent adult:
CPM_RDSP_Application - This should be completed in the same manner as any other RDSP account, with the exception of Section 5 - Holder Information. Ensure that the appropriate boxes at the bottom of this section are selected to accurately reflect the situation.
ESDC-EMP5608 (Applying for Grants and Bonds) - This form should be completed in the same manner as for any other RDSP account, with the exception that Section 4 should not be signed by the beneficiary if they lack contractual competence, as indicated by the requirements.
ESDC-EMP5611 and ESDC-EMP5612 (Existing RDSP to be Transferred In) - Only the holder is required to sign Form 5612.
Additional considerations for RDSPs where the beneficiary is not contractually competent include:
For a child, the Holder must be a parent or guardian. Parents can retain holdership of the plan even after the child reaches adulthood. They may also choose to transfer holdership or become joint Holders.
For an adult lacking contractual competency, the federal government permits parents, spouses, and common-law partners to become plan Holders until December 31, 2023. If appointed before 2024, such a family member can maintain holdership for life. This provision does not apply to an already established RDSP or if the individual already has a legal representative.
An adult lacking contractual competency may also have an adult guardian appointed (or a representative through a representation agreement, in British Columbia only) to open and manage the RDSP. The term for an adult guardian varies by province and includes titles such as power of attorney, tutor, trustee, curator, and committee.
An adult with contractual competency can designate a Power of Attorney or representative (in British Columbia) to manage their financial affairs.
Some scenarios may necessitate independent legal advice.