Who Sets Up And Manages An RDSP?

An RDSP is owned by the Beneficiary – the person who has been granted disability status by Canada Revenue Agency and is claiming the Disability Tax Credit.

An RDSP is administered by the Account Holder.

a)   The Account Holder of an RDSP

The Account Holder is the person who is legally authorized to manage and make decisions regarding an RDSP.  The Holder and Beneficiary can be the same person or they can be different people.  Some banks also permit co-Holders, but both people must be qualified to act as a Holder.

b)    Setting up RDSPs for Minor Children

Parents, legal guardians or public departments (Child Welfare/Public Guardian and Trustee) may be the Holders of RDSP’s for children.  That is, they can set up and manage RDSPs for children.

When children become adults (Under the Income Tax Act a person is treated as an adult for the year in which they turn 19), parents automatically continue as the Holder of the RDSP. They may choose to appoint the Beneficiary as the Holder or they may add the Beneficiary as co-Holder.  (Note: People need to check with financial institutions as not all permit co-Holders).  While parents can choose to continue as the Holder after their son or daughter becomes an adult, they cannot pass on this role to another person. That means they cannot appoint someone to take on the role of Holder in their Will.

Any other person wishing to act as Holder of a plan for an adult needs to be a “legally authorized representative” (more in the next section)

c)   Adults

When an RDSP is opened for an adult Beneficiary, only the Beneficiary or a person legally authorized to represent the Beneficiary can be the Holder.  Parents or other family members are not automatically authorized.

Who is legally authorized to represent the adult Beneficiary?

  1. A Power of Attorney – if the person has the legal capacity to appoint one
  2. A Representative (under the BC Representation Agreement Act) – people do not need to have legal/contractual capacity to appoint a Representative (Only in BC). Read more about Representation Agreements and RDSPs.
  3. An Adult Guardian –  can be appointed, if the person is deemed not to be capable of managing his/her own financial affairs.  Each province may use a different term to refer to an adult guardian. Other terms include: Curator, Trustee, Trustee of Estate, Committee.
  4. The Public Guardian and/or Trustee – can be appointed by the Beneficiary as a legally authorized representative or by the court as an adult guardian if the person is deemed not to be capable of managing his/her own financial affairs.

 

What happens when there is conflict between Holders?

What happens when a beneficiary reaches adulthood?

Go to: How do contributions work?

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