1. Special Needs Planning
Presented and created by:
David Yurich, B.Comm., CFP®, RFP, CLU
Director Private Client Group, Senior Investment Advisor
Welcome, VERY PLEASED TO BE HERE
ALSO WELCOME TO OUR FRIENDS IN ESPANOLA
THIS TOPIC IS VERY DEAR AND PERSONAL TO ME, MY NEPHEW CHRISTOPHER HAS AUTISM SPECTRUM DISORDER
TODAY COVER MANY TOPICS, BUT WILL ENCOURAGE YOU TO QUESTION ME FOR INFO ON ANY FINANCIAL PLANNING TOPIC
THANK THE BOARD OF AUTISM ONTARIO SUDBURY CHAPTER FOR THIS OPPORTUNITY
OFFENSIVE LANGUAGE, APOLOGISE WORDS LIKE DISABILITY/IMPAIRMENT/SEVERE/PROLONGED/SPECIAL NEEDS CHILDREN/DEPENDANT CHILD ARE USED TO WORK W/I REGULATIONS TO GET GOVERNTMENT FUNDING
WILL ALSO USE “ENHANCEMENTS TO QUALITY OF LIFE” WHICH IS NOT INTENDED TO SAY THAT “YOUR CURRENT LIVES ARE NOT GREAT THE WAY THEY ARE! WE SIMPLY WANT TO ENSURE THIS INTO THE FUTURE THE QUALITY OF THE LIVES OF YOUR CHILDREN , WHEN YOU ARE NO LONGER HERE!

2. Special Needs Planning
Provide for our communities', sons & daughters with a disability → ”Quality of Life” they are entitled to it now and when we are gone
Protect their entitlement to Ontario Disability Support Program & other Government Programs
Must be certain that the planning that is done, does not infringe on government regulation (s)
Ensure children cannot outlive the benefits they derive from our planning
PROVIDE QUALITY OF LIFE NOW AND WHEN GONE
PROTECT ENTITLEMENT TO ODSP
PLANNING NO INFRINGE ON GOVERNMENT REGULATIONS
CHILDREN NO OUTLIVE BENEFITS DERIVED PLANNING

3. Special Needs Planning
As parents, want guarantees in place to ensure intentions are met after we are gone
Fairness to Siblings:
Common theme not to burden non disabled children with responsibility of caring for disabled sibling
Parents realize these children either lead or will lead their own lives
Ensure plans are simple & effortless
Proper balance between needs of All children
AS PARENTS, IT IS TRYING AT THE BEST OF TIMES TO RAISE KIDS
WE ALWAYS WANT THE BEST FOR THEM
WHEN DEALING WITH SPECIAL NEEDS CHILDREN, THE PLANNING DONE NEEDS GUARANTEES IN PLACE TO ENSURE OUR INTENSIONS ARE MET, WHICH GIVES US MUCH NEEDED PEACE OF MIND
HOWEVER, NEED TO BE MINDFUL OF OUR OTHER CHILDREN (IF THERE ARE ANY):
TYPICALLY, PARENTS WANT TO BE FAIR: NOT TO BURDEN NON DISABLED CHILD WITH RESPONSIBILITY TO CARE FOR DISABLED CHILD
I KNOW THAT IN OUR HOME AS IT STANDS NOW, LAURYN WOULD DO ANYTHING FOR CASSANDRA, AND VICE VERSA (THAT ALSO DEPENDS ON THE DAY)
BUT AS PARENT, I DON’T WANT TO LEAVE THIS ENTIRE RESPONSIBILITY TO EITHER ONE OF THEM, SHOULD THIS HAPPEN TO US I WANT TO MAKE SURE THAT WE TAKE FULL ADVANTAGE OF WHAT IS AVAILABLE WITHIN OUR SOCIETY TO HELP OUT!
REASON: OUR KIDS MAY BE ALREADY BUILDING LIFE OF THE OWN, OR EVENTUALLY WILL BE, AND THAT’S TOUGH
SO OUR PLANS NEED TO BE SIMPLE AND EFFORTLESS
SO THE PLANNING MUST START TODAY, AND GO ON CRUISE CONTROL WHEN WE ARE NOT HERE
ANOTHER COMMON THEME: TYPICALLY PARENTS WANT TO BALANCE THE NEEDS OF ALL CHILDREN, TO MAINTAIN FAMILY HARMONY

4. Special Needs Planning Goals
What the disability and caregiver tax credit means to you and your family
Why creating a Henson Trust, via a Testamentary Trust Will is so important to you and your family
How we can use the tax savings to offset the creation of these trusts
How we can use the tax savings to offset the long term funding costs these trusts
Explore the reality and importance of long term financial and estate planning
Review the current benefits offered through the Ontario Disability Support Program Benefits
Explore the newly created Registered Disability Savings Plans with a focus on the available Canada Disability Savings Grant and the Canada Disability Savings Bonds
THESE GOALS MAY BE OVERWHELMING, BUT REST ASSURED THERE ARE CARING, PROFESSIONAL AND COMPETENT PEOPLE WITHIN OUR COMMUNITY, READY AND WILLING TO HELP
PLEASE FEEL FREE TO QUESTION THIS AS WE MOVE THROUGH THE DIFFERENT TOPICS
ALSO INDIVIDUAL PLANNING IS NECESSARY BECAUSE NO TO FINANCIAL/SPECIAL NEEDS PLANS ARE THE SAME

5. Disability (DTC) & Care Giver Tax Credit (CGTC)
Copy of DTC in package
Package contains: Federal DTC Certificate and a list of current Qualified Medical Expenses Tax Credit items
Must be completed by parent and qualified practitioner
What constitutes the qualification for DTC , CGTC
COPY IN PACKAGE
QUALIFIED PRACTIONER: DOCTOR, OPTOMETRIST, AUDIOLOGIST, OCCUPATIONAL THERAPIST, PHYSIOTHERAPIST, PHYCHOLOGIST, SPEECH LANGUAGE PATHOLOGIST
QUALIFY: INDIVIDUAL MUST HAVE IMPAIRMENT IN MENTAL OR PHYSICAL FUNCTION WHICH HAS LASTED OR IS EXPECTED TO LAST FOR A CONTINUOUS PERIOD OF 12 MONTHS
SPECIFICALLY:
BLIND
RECEIVING LIFE SUSTAINING THERAPY
BEING ABLE TO SPEAK (SIMPLY, OR DOES IT TAKE AN INORDINATE AMOUNT OF TIME TO SPEAK??)
HEAR?
WALK?
HAVE CONTROL OVER BLADDER OR BOWEL FUNCTION?
CAN THEY FEED THEMSELVES?
CAN THEY DRESS THEMSELVES?
CAN THEY PERFOM THE MENTAL FUNCTION OF EVERYDAY LIVING?
THE EFFECTS OF THE IMPAIRMENT CAUSES YOU TO BE MARKEDLY RESTRICTED IN AT LEAST ONE OF THE ACTS OF DAILY LIVING (ADL), ALL OR SUBSTANTIALLY ALL OF THE TIME, EVEN WITH THERAPY AND THE USE OF APPROPRIATE DEVICES AND OR MEDICATION

6. DTC & CGTC… “Why Bother?”
Max DTC transferred from child (2012 tax year) $7546
Additional Supplement $4402 (Child under age 18-offset with child care expenses)
Total possible Tax Credit $11,958
Tax savings range $1,131 - $1,792 (real $$)
Retroactive to date of diagnosis - can go back 10yrs or more ($ $17,937)
Source: 2012 Federal Schedule 1 (T1 General)
DISABILITY TAX CREDIT
SUPPLEMENT
TAX CREDIT MULTIPLIED BY 15%
OFFER TO THE PARTICIPANTS HERE TO FILE THE DISABILITY TAX CREDIT AND IF NEEDED, FILE THE NECESSARY T1 ADJ AT NO CHARGE
ALSO EXPLAIN NON REFUNDABLE TAX CREDIT

7. Care Giver Tax Credit
Children with disabilities possibly grow up to be adults with disabilities
Tax credit $4402 – Income dependent
In addition to DTC
IF CHILD OLDER THAN 8, CGTX CREDIT IS ADDED TO THE DISABILITY TAX CREDIT, THAT CAN BE TRANSFERRED TO THE PARENT, HOWEVER THIS IS INCOME DEPENDENT
THE PREVIOUS TAX CREDIT DISCUSSION IS ALSO CHILD INCOME DEPENDANT, HOWEVER, MOST CHILDREN DO NOT HAVE SIGNIFICANT INCOMES, SO THEY USUALLY QUALIFY FOR THE MAX CREDIT

8. “Medical Expense”
Don’t qualify for DTC or CGTC, then claim all associated medical expenses
Claim medical expenses for yourself, spouse or common law spouse partner & children born 1994 or later
List of “Eligible Expenses” in kit
Source: 2012 T1 General Income Tax Guide
NO DTC, OR CGTC, THEN MEDICAL EXPENSE
CLAIM FOR FAMILY
LIST IN KIT
GENERALLY YOU CAN CLAIM ALL AMOUNTS PAID, EVEN IF THEY WERE NOT PAID IN CANADA
CANNOT CLAIM FOR EXPENSES THAT WERE REIMBURSED
HOWEVER, IF THE REIMBURSEMENT WAS INCLUDED IN YOUR INCOME, SUCH AS ON YOUR T4 SLIP, THEN YOU CAN CLAIM THE EXPENSE
SPECIAL NOTE

9. Will Kits…Not the answer for families of people with disabilities
Kits advertised on very low cost
Advertisements suggest replacing a competent lawyer to complete Wills by filing out blanks on a questionnaire
Concern → Don’t ask the right questions regarding special needs
We encourage retaining professional legal advice with individuals who specialize in this field

10. Testamentary Trust Wills & The Henson Trust
What is it????
Trust that arises on death through a Will
Creates legal relationship between the Settlor, the Trustee & the Beneficiary
What makes Testamentary Trusts different from other Trusts is the favorable tax treatment they receive under Income Tax Act (ITA) (at this time)
Pay tax at graduated levels
TRY TO USE A WHITE BOARD TO HIGHLIGHT THE “TRIANGULAR RELATIONSHIP” WITH SETTLOR(PARENTS), BENEFICIARY (CHILD) AND TRUSTEE WHO IS OFTEN THE EXECUTOR OF THE WILL, BUT CAN ALSO BE SEPARATE PERSON, FIRM OR AGENCY)

11. Testamentary Trust Wills & The Henson Trust
Terms of Trust can provide for payment of income/capital or both to Beneficiaries
Interest of Beneficiaries can be fixed in the Will or
Discretion to allocate the income and/or capital among the Beneficiary(ies) can be left to the Trustee

12. Testamentary Trust Wills & The Henson Trust
Beneficiaries of Trust have interest in Trust Property
Trustee is legal owner of property
Trustee has authority to control the management of the assets
Trustee has absolute power over the assets with discretion to exercise power based on Settlors wishes/intentions
TRUSTEE’S OBLIGATION INCLUDE MAKING DECISIONS ABOUT THE INVESTMENT OF THE TRUST ASSETS AND PREPARING AND FILING TAX RETURNS ON BEHALF OF THE TRUST
CAN ALSO HAVE MULTIPLE TESTAMENTARY TRUSTS WITHIN A WILL

13. Taxation of Testamentary Trust
Trust treated as separate tax payer under ITA
Trust files Income Tax Returns to report income, gains & distributions to Beneficiaries each year
Can have a non-calendar year
Trust receives deduction from income & gains in a year for amounts paid to Beneficiaries in that year

14. Taxation of Testamentary Trust
Living Trusts “Intervivos” pay highest Marginal Tax Rate (MTR)
Testamentary Trusts pay tax at a graduated level
Ontario combined Federal/Provincial 2013
First $ %
Over $ $ %
Over $ $ %
Over $ $ %
Over $ $ %
Over $ $ %
Over $ $ %
Over $ $ %
Over $ %
Source:

15. Taxation of Testamentary Trust
Tax payable in province of residence of Trust or where majority of Trustees reside
Incomes maintains its character (interest, dividends, capital gains) when paid out to Beneficiaries
GIVE EXAMPLE OF ONTARIO AND BRITISH COLUMBIA

16. Taxation of Testamentary Trust
Access to graduated rates, more beneficial to retain income & gains and have Trust pay tax versus Beneficiary (at this time)
Trustee can elect to have income & gains taxed in Trust even if paid or payable to Beneficiary
Portfolio of Investments of 8% per year or $60,000 in income saves $8,500 in taxes each year
TRUSTEE ELECT TRUST TO PAY TAX, EVEN IF PAID TO BENEFICIARY:
IN THIS WAY, INCOME THAT WOULD OTHERWISE BE TAXES AT THE HIGHEST MTR IN THE HANDS OF THE BENEFICIARY, WHO ALREADY PAYS TAX AT THE HIGH RATE, CAN BE TAXES AT A GRADUATED RATE IN THE TRUST

17. Why consider a Testamentary Trust?
When a spouse has enough assets in his/her name to permit other spouse assets to be held in trust to save tax
Children/grandchildren have enough assets who want to save tax
Protect assets widow/widower’s new suitor or children spouse’s on marital breakdown
Protect spendthrift or disabled child/children

18. Ontario Disability Support Program (ODSP)
Operated by Ontario Ministry of Community & Social Services
Designed to meet unique needs of people with disabilities who are in financial need or who want & are able to work and need support
ODSP provides income support to help pay for living expenses (like food & housing)
Benefits available:
Drug/dental coverage, vision care, hearing aids, diabetic supplies
Help with transportation costs to medical appointments
Help with work related expenses, child care costs & items needed for work
If qualify → May also receive special diet allowance to offset costs of casein, gluten, soy or sugar free diet

19. Ontario Disability Support Program (ODSP)
To Qualify:
18 yrs of age or older-payable to 65 (if needed) then CPP, OAS & GIS takes over
Ontario resident
In financial need
Have substantial physical or mental disability that:
is expected to last a year or more
makes it hard for you to care for yourself, take part in community life or work
ODSP will look at:
Financial situation ( assets, income, housing costs, size of family)
Disability status

20. Ontario Disability Support Program (ODSP) Rate Chart-November 2012
Source:
Basic Needs Table
Number of dependants other than a spouse
Dependants over 18 years
Dependants years
Dependants years
Recipient (See Note 1 below)
Recipient and Spouse (See Note 2 below)
Recipient and Spouse (See Note 3 below)
$596
$882
$1,189 1
739
882
1,189
757
900
1,207
951
1,063
1,370 2
775
918
1,225
969
1,081
1,388
1,133
1,264
1,571
For each additional dependant, add $202 if the dependant is 18 years of age or older, or $18 if the dependant is years of age, or $0 if the dependant is 0-12 years of age.
PLEASE UNDERSTAND THE THESE ARE THE POSTED BENEFIT RATES AS OF NOVEMBER AS PER OUR DISCUSSIONS WITH THE MINISTRY OF COMMUNITY AND SOCIAL SERVICES, THESE RATES ARE NOW UNDER REVIEW, SINCE THIS PLAN WILL BE SOMEWHAT INTEGRATED WITH A NEW FEDERAL INITIATIVE.
HOWEVER, AS PER OUR DISCUSSIONS, THE RATES WILL NOT CHANGE THAT MUCH
AS YOU CAN SEE, THE AMOUNTS OF MONTHLY INCOME, ARE VERY LOW

21. ODSP & Inheritances
Family members if left an inheritance who are receiving ODSP benefits will not be eligible for ODSP benefits
ODSP considers inheritance as a gift
Exemptions:
- up to $6,000 of total value of all gifts is exempt from income (in any 12 month period without affecting ODSP Income Support)
- $6,000 limit does not always count as income-when used to pay for disability related items or services
- ODSP must approve item or service in advance to be exempt
Source:
SO FAR WE HAVE COVERED:
TAX CREDITS AND POTENTIAL TAX SAVINGS
WE INTRODUCED A NEW PLANNING TECHNIQUE TO ENSURE ARE INTENSION ARE MET, IF WE ARE NOT HERE, USING TESTAMENTARY TRUST WILLS
WE HAVE REVIEWED WHAT IS AVAILABLE CURRENTLY WITH ODSP AND OTHER COMMUNITY SUPPORT PROGRAMS
AND WE HAVE LEARNT, THAT THE AMOUNT OF MONEY RECEIVED BY A DEPENDANT CHILD IS VERY LOW
MUCH LESS THAN WHAT IS NEEDED TO PROVIDE FOR ENHANCEMENTS TO THE QUALITY OF LIFE
AS PARENTS, WE WILL BE THERE TO SUPPORT OUR CHILDREN, THROUGH GOOD TIME AND BAD.
BUT WHAT HAPPENS IF WE ARE NOT HERE.
TYPICALLY WE WOULD PROVIDE FOR OUR CHILDREN THROUGH OUR WILL, WHAT’S LEFT OVER FROM OUR ASSETS THAT GETS PASSED TO OUR ESTATE, THEN DISTRIBUTED TO OUR CHILD/CHILDREN
ODSP AND INHERITANCES

22. ODSP & Inheritances… Example
Inherit $ in August ODSP will consider it when calculating income support for August
If $ left over in next month- (Sept.) ODSP will treat it as an asset in that month & asset rules will apply that can affect eligibility for income support

23. ODSP & Inheritances…
Inheritances up to $100,000 will not count as an asset if it is placed in a Trust
Trust must be setup according to ODSP rules or ODSP benefits could be affected
If inheritance more than $100,000 can still continue benefits if placed within Discretionary Henson Trust
Setup through Will & gives Trustee power to decide when to pay & how much money to pay Beneficiary of the Trust
THERE IS SOME RELIEF FROM CURRENT ODSP REGULATIONS REGARDING INHERITANCES
UP TO $ CAN BE RECEIVED AND IF PLACED WITHIN A PROPERLY SETUP TRUST, WILL NOT AFFECT ODSP BENEFITS
HOWEVER, AS PARENTS, WE KNOW THAT OVER THE COURSE OF A LIFETIME, $ IS NOT A LOT OF MONEY
THE ANSWER IS TO SETUP A SPECIAL PROVISION, THROUGH THAT TESTAMENTARY TRUST WILL, REFERED TO AS A DISCRETIONALY TRUST, OR ABSOLUTE DISCRETIONARY TRUST, OR A HENSON TRUST
THESE WORDS ARE USED INTERCHANGEABLE

24. ODSP & Henson Trust History of Henson Trusts
Real solution to inequity is Henson Trust
Available in Ontario since 1989
Henson trust places estate assets in the care & control of a trustee to be administered for the benefit of a Beneficiary(s)
Inheritances placed in a properly prepared absolute discretionary trust (Henson Trust) are not the asset of the child & will not affect provincial benefits
“Discretionary Trust”, “Henson Trust” & “Absolute Discretionary trust” often used interchangeably
WE MAY NOT KNOW THIS, BUT AS ONTARIANS WE WERE VERY LUCKY THAT A MAN BY THE NAME OF LEONARD HENSON, LIVE AND DIE HERE
DURING THE 1980’S MR HENSON LIVED IN THE GUELPH AREA
MR HENSON WAS WIDOWER
HAD ONLY ONE DAUGHTER NAMED AUDREY
AUDREY HAD A DEVELOPMENTAL DISABILITY AND LIVED IN A GROUP HOME
GROUP HOME MANAGED BY GUELPH ASSOCIATION FOR COMMUNITY LIVING
MR HENSON KNEW THAT IF HE LEFT HIS ESTATE FOR AUDREY AT HIS DEATH, EXCEED ALLOWABLE LIMITS
SET OUT BY FAMILY BENEFITS ALLOWANCE (NOW CALLED ODSP)
IF AUDREY WERE LEFT ASSETS, SHE WOULD HAVE TO “SPEND DOWN” THE ASSETS UNDER THE THRESHOLD AMOUNT IN ORDER TO REQUALIFY FOR INCOME AND BENEFITS
SO HOW WAS HE GOING TO LEAVE HIS ESTATE TO THE DAUGHTER AND STILL MAINTAIN THE ODSP INCOME AND BENEFITS
SOLUTION: CREATE AN ABSOLUTE DISCRETIONARY TRUST, THROUGH HIS LAST WILL AND TESTATMENT
SO HE DID THIS
UNFORTUNATELY HE THEN DIED
AT THAT POINT THE WILL DIRECTED THE CREATION OF THE ABSOLUTE DISCRETIONARY TRUST
APPOINTED THE GUELPH ASSOCIATION OF COMMUNITY LIVING AS TRUSTEE
BENEFICIARY WAS DAUGHTER AUDREY
ONCE AUDREY DIED, THE BALANCE OF THE TRUST WOULD BE PAID THE ASSOCIATION
THE MINISTRY DETERMINED THAT AUDREY RECEIVED AN INHERITANCE AND TERMINATED BENEFITS
THE ASSOCIATION THEN CHALLENGED THIS DECISION, TOOK THE MINISTRY TO COURT
FIRST COURT FOUND THAT THE TRUST ASSETS DID NOT MEET THE ODSP DEFINITION OF ASSETS AND RULED IN FAVOR OF AUDREY AND THE ASSOCIATION
MINISTRY WAS NOT IMPRESSED AND APPEALED
ULTIMATELY REACHED THE SUPREME COURT OF ONTARIO, IN SEPTEMBER 1989, AND WAS ALSO DISMISSED
WHAT DID THAT DO?: FOR EVER SETTLED THE ISSUE AND FAMILIES CAN NOW PROVIDE FOR DISABLED SONS AND DAUGHTERS A VEHICLE IN WHICH THEY CAN PLACE ASSETS WITHOUT DISQUALIFYING THEM FOR ODSP PAYMENTS WHICH THEY WOULD OTHERWISE BE ENTITLED TO

25. Motivation for Parents & Guardians to set up a Henson Trust
Special beneficiaries often benefit from guidance in handling large sums of money or significant assets
Either temporarily or on L.T. basis
Some beneficiaries are unable or unwilling to seek guidance
May at some point be left without care unless special provisions put in place

26. Henson Trusts
Must be created during a parent’s or guardian’s lifetime (Intervivos)
and
To the terms of a parent’s or guardian’s will (testamentary)
TYPCIALLY THE PARENTS START BY CONTACTING THEIR TEAM OF PROFESSIONAL ADVISORS
THAT CAN BE THEIR LAWYER, THEIR FINANCIAL PLANNER, OR THEIR ACCOUNTANT
THAT TEAM WOULD THEN IDENTIFY THE NEED, CREATE THE SPECIAL PLAN, AND INSTRUCT THE PARENT HOW TO BEST SETUP THE PROGRAM
IT NEEDS TO BE DONE DURING THE PARENT’S LIFETIME, IE: MEET WITH THE LAWYER, DRAW UP THE WILL, EXPRESS THE INTENTIONS, CREATE A FUNDING SOLUTION, ETC
THEN AT DEATH, THE PROVISION PREPARED FOR WOULD KICK IN
These Trusts are invaluable in planning for child’s care when Parent/Guardian no longer there

27. Benefits of Henson Trust
No lifetime limit to the exempt amount of assets that can be held in a Henson Trust
In contrast- there is $100,000 lifetime limit to a non Henson Trust, (any Trust where the Trustee does not have absolute discretion)

28. The Bottom Line
Henson trusts, ODSP, Benefits & Tax Credits are special arrangements necessary to properly ensure that Loved Ones are given the extra care they deserve & that inheritances will not be wasted

29. Options for Funding of Henson Trust
Savings: The establishment of a regular savings program may be able to provide adequate funds to Henson Trust
Parent’s Estate: Provided that the parent’s estate is sufficiently large, it could provide for their own needs in their elder years, as well as having enough left over to fund the trust
Family members: siblings, aunts and uncle’s, grandparents could be willing and able to provide money to fund the trust
Life insurance: For the average family, life insurance may be the only way that they can leave a large sum to the trust by making small monthly payments. It is also possibly the only way of funding a trust that is guaranteed. The other resources mentioned above may not always be available but a paid-up life insurance policy can guarantee future funds
FOUR DIFFERENT FUNDING OPTIONS

30. Registered Disability Savings Plan (RDSP)
Savings plan intended to help parents & others save for long term financial security of person who is eligible for DTC
Contributions non tax deductible
Made until end of the year that Beneficiary turns 59 years
WE WILL NOW SWITCH GEARS AND TALK ABOUT THE NEWLY CREATED RDSP, WHICH WAS ROLLED OUT BY THE FEDERAL GOVERNEMENT AND PARTICIPATING FINANCIAL INSTITUTIONS IN DECEMBER OF 2008

31. RDSP…
Withdrawals of contributions are not included as income for the Beneficiary
However, Canada Disability Savings Grant, Canada Disability Savings Bond & investment income earned in the plan are included in Beneficiary’s income for tax purposes when paid out of RDSP

32. RDSP… Who can become a Beneficiary? One must be:
Eligible for Disability amount
Valid SIN
Resident of time plan is entered into
Under age 60

33. RDSP… Legal parent of Beneficiary Who can set up an RDSP?
Guardian, tutor or curator of the Beneficiary
Individual who is legally authorized to act on behalf of Beneficiary
Public department, agency, institution that is legally authorized to act on behalf of Beneficiary
Who can set up an RDSP?

34. RDSP…
When plan is opened by a Beneficiary’s legal parent’s, the legal parents may continue as holder(s) of the plan after Beneficiary reaches age of majority
When Beneficiary becomes an adult, he/she may be added as joint holder

35. RDSP…
In all other cases, the Beneficiary is the only one who can be a plan holder once they have reached age of majority & are contractually competent
If a plan is opened by somebody other than the Beneficiary, or Beneficiary’s legal parents, that person or body must be removed as a holder of the plan when Beneficiary reaches age of majority

36. RDSP…
An individual who is eligible to be Beneficiary of an RDSP, may have reached age of majority but may not be competent to enter into a contract
If so: qualified person may open RDSP for individual and become holder
Qualified Person are: -guardian, tutor, curator of Beneficiary, or person legally authorized to act for Beneficiary
-public department, agency, institution that is legally authorized to act for beneficiary
Tutor or Curator: legally appointed individual either by will or by POA

37. RDSP…
Holder who is not Beneficiary of plan does not have to be resident of Canada but must have valid SIN or BIN (business identification number) in order to establish plan

38. How Do You Establish an RDSP?
Person who is qualified to be a holder of the plan must contact a participating financial institution that offers RDSP’s (can invest in GIC’s, mutual funds, savings deposits etc.)
Note: Beneficiary can have only one RDSP at any given time, although this plan may have several plan holders throughout it’s existence
Plan holder is the person who establishes the RDSP & makes contributions on behalf of the Beneficiary

39. RDSP Limits
No annual limit
Lifetime limit of $200,000

40. Canada Disability Savings Grants
Government will pay matching grants of 300%, 200% or 100%, depending on family income & amount contributed
RDSP can receive maximum of $3,500 in matching grants, in a year
Maximum grant of $70,000 in Beneficiary’s lifetime
Source:

41. Canada Disability Savings Grants…
Grant can be paid to an RDSP on contributions made to Beneficiary’s RDSP by Dec 31st of yr Beneficiary turns 49 yrs old
When annual net family income is less than $ the grant will contribute:
- $3 for every $1 contributed on first $500
- $2 for every $1 contributed on next $1,000
(a $1,500 deposit will attract maximum grant of $3,500)
When annual net family income is over $85414 the grant will contribute $1 for every $1 contributed up to $1,000
Source:

42. Canada Disability Savings Bond
Government will pay income tested bonds of up to $1,000 a year to low income Canadians with disabilities regardless of amount contributed
Lifetime bond limit is $20,000
Bond can be paid to RDSP until year in which Beneficiary turns 49
When annual net family income is $24863 or less the government will provide $1,000 per year without any contributions, between $24863 and $42707, bond is prorated, over $42707, no bond is paid
Bond & grant must stay in plan for 10 years otherwise must be repaid
Source:

43. Payments Made From RDSP
Payments to Beneficiary referred to as Lifetime Disability Assistance Payments (LDAP), or Disability Assistance Payments (DAP)
Payments to Beneficiary’s estate follow death of Beneficiary
Repayment of grants & bonds to the government
Only certain payments can be made from an RDSP

44. Lifetime Disability Assistance Payments (LDAP)
Once started must be paid at least annually until either the plan is terminated or Beneficiary has died
Begin by end of year in which Beneficiary turns 60
Subject to annual maximum withdrawals limit based on Beneficiaries' life expectancy & fair market value of plan

45. Disability Assistance Payments (DAP)
Beneficiary can request withdrawal from RDSP between ages years
DAP is considered “financial hardship” payment
Maximum withdrawal based on formula
Then
Beneficiary of plan will be entitled to request & receive DAP from the plan

46. RDSP Payments & Income Tax
CDS grant, bond & investment income are included in Beneficiary Income for tax purposes when paid out of the RDSP
RDSP issuers report the taxable portion of the payments from the plan in box 78 of T4A slip

47. RDSP-What happens when impairment no longer exists?
RDSP must close no later than the end of calendar year following the first full calendar year that the Beneficiary is no longer considered mentally or physically impaired
Grant, Bond and Investment earnings are taxable, contributions are tax free
Similar tax treatment occurs at death

48. RDSP & Provincial Disability Benefits
BC, Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland, Labrador & Yukon have all exempted the RDSP as an asset & income when determining a person’s eligibility for Provincial Disability Benefits

49. New for 2011, Past Grants
Eligible to claim past unclaimed grants for preceding 10 years (2008 inception date)
To be eligible, must still qualify for DTC and be appropriate age in each preceding year
Past grants paid to annual max $10500
Unused past grants carry forward future years

50. New 2011 Past Bonds
Eligible to claim past unclaimed bonds for preceding 10 years (2008 inception date)
To be eligible, must still qualify for DTC and be appropriate age in each preceding year
Depends on contribution amount, beneficiary/family net income
Past bonds paid to annual max $11000
Unused past bonds carry forward future years

51. For more information / free consultation
Thank You!
For more information / free consultation /
This presentation was prepared by David Yurich, who is a registered Financial Advisor with Dundee Private Investors Inc., a DundeeWealth Inc. Company. This is not an official publication of Dundee Private Investors Inc. The views (including any recommendations) expressed in this presentation are those of the author alone, and they have not been approved by, and are not necessarily those of, Dundee Private Investors Inc.