Enhancing Quality of Life for a Person with a Disability on ODSP Disability Benefits Sallie Hunt Northwest Community Legal Clinic

Locating ODSP Policy Directives To find ODSP Policy Directives – Go To: Ministry of Community and Social Services at o Click on Ontario Disability Support Program o Find Please Note – Click on ODSP policy directives o Click on Income Support Directives social/directives/ODSP_incomesupport.htm

TOPICS: Investments & Estate Planning o Exempt Assets & Investments for people receiving ODSP benefits o RESPs & RDSPs o Trusts o Leaving gifts in your Will through a Trust o Henson Trust – a special type of Trust

Exempt Income/Assets on ODSP o $5,000 for a single person  Income was increased to $6,000 from gifts, voluntary payments, payments from trusts or life insurance policy, honorariums or windfalls o Owning a home or Principal Residence o Vehicle o2 nd vehicle if required for work o CCTB, NCBS, OCB, etc.

Exempt Assets on ODSP o Payments from any source for disability- related items o Pre-paid funeral o Earnings & Assets of dependent children o Earnings & Assets of a dependent adult while attending school o Locked-in RRSPs and locked-in pensions

Exempt Assets on ODSP o Trust fund from insurance proceeds or inheritance* o Life insurance policy* o Pain & suffering awards/settlements* o WSIB non-economic loss (NEL) awards* *To a Maximum of $100,000

Investments Allowed on ODSP RESPs*  Registered Education Savings Plans *Lifetime Limit of $50,000 oCESGs + CSBs RDSPs**  Registered Disability Savings Plans **No Maximum Limit

RESPs – What is an RESP? RESP – Fed Gov’t incentive program for parents and family to save for a child's post-secondary education RESPS include: 1. Canada Education Savings Grant (CESG) o CESG* pays 20% (or more) of annual contributions made to an RESP – to a maximum of $500/child ($1,000/child if unused from previous year) * Lifetime Limit of $7,200 If funds are taken out of an RESP prematurely  must repay the Gov’t of Cda for the CESG (unless child/beneficiary is already attending a post-secondary institution)

RESPs – include: 2. CLB – Canada Learning Bond CLB pays $500 first year and $100 per year* until child is 15 oIf child qualifies – born after Dec. 31, 2003, & receives the National Child Benefit Supplement (NCBS) *To a Maximum of $2,000 o The first deposit of the CLB includes an extra $25 to cover the cost of opening an RESP o You do not have to contribute money to receive CLB payments – JUST OPEN an RESP

RESPs – To Open an RESP o It costs $1.00 to open an RESP account for a child with a RESP provider (most financial institutions) o You will need a Social Insurance Number (SIN) for you and your child o If you do not have a SIN – Apply at your local Service Canada office or go online to

RESPs – To Open an RESP o You do not need a bank account to open an RESP o There are several types of RESPs – Family Plan, Individual Plan or Group Plans o There is no age limit for opening an RESP o An RESP can stay open for a maximum of 26 years (31 years for a person with a disability)

RESPs – Contributions o You will not be taxed on the amount you contribute to your RESP o Interest paid on any money borrowed to contribute to an RESP cannot be deducted o You do have to pay taxes on the money you earn in the RESP plan as interest For more info on RESPs go to: rc4092/rc4092-e.html#P52_7449

RESPs – Registered Education Savings Plans for those on ODSP o Any member of the family benefit unit can have an RESP  Exempt Asset o Any money or gifts paid into an RESP  Exempt Asset o Fed Gov’t matching payments - CESG or CSB into RESP  Exempt Asset o Beneficiary of RESP can be changed from one child to another

RESPs – Registered Education Savings Plans for those on ODSP o RESP funds used for Education Costs  Exempt  can be used for part- or full-time study o Some of the RESP funds can be used as an Educational Assistance Payment* to fund a Qualified Educational Program *To a Maximum of $5,000 Educations Costs: Tuition & other fees, books, instructional supplies & equipment, transportation, and disability-related expenses

RESPs –Child does not continue Education after high school If your child does not continue education after high school : (1) Wait as your child may decide to study later (2) Transfer the money to a sibling’s RESP (3) Transfer money to an RRSP or (4) Consult with your RESP provider about withdrawing your savings

RDSPs – What are Registered Disability Savings Plans? RDSP is a savings plan for parents and others to save for a person who is disabled and eligible for the Disability Tax Credit o Contributions to an RDSP are not tax deductible o Contributions can be made until the disabled/beneficiary turns 59 years of age For more info go to: arc.gc.ca/tx/ndvdls/tpcs/rdsp-reei/

RDSPs – To Set Up an RDSP First - Qualify for federal Disability Tax Credit (DTC) o Complete Form T2201, Disability Tax Credit Certificate - o Take the form to a qualified health professional o Once completed send it to the Winnipeg Tax Centre o This can be sent at any time during the year

RDSPs – Contributions Contributions o No annual limit o Contributions are limited to a lifetime amount of $200,000 RDSPs include contributions from: 1. Canada Disability Savings Grants (CDSG) 2. Canada Disability Savings Bonds (CDSB)

CDSG + CDSB Contributions 1. Canada Disability Savings Grants (CDSG)* o Fed Gov’t will match annual contributions to a maximum of $3,500/year and to a lifetime CDSG limit of $70, Canada Disability Savings Bonds (CDSB)* o Bonds up to $1,000/year  provided for low- & modest- income families, to a lifetime limit of $20,000 o No requirement to contribute to RDSP to access CDSBs *Can be paid until the Beneficiary turns 49

RDSPs -Withdrawal of Funds Contributions made to an RDSP are not included as income for the beneficiary when withdrawn But, the Grant (CDSG), Bond (CDSB) and any investment income earned  will be included in the beneficiary’s income for tax purposes when the money is withdrawn

RDSPs – Registered Disability Savings Plans for those on ODSP o All funds in RDSPs  Exempt Asset o no matter who makes payments to RDSP o Canada Disability Savings Grants (CDSG) & Bonds (CDSB)  Exempt Asset o Income (interest) earned & reinvested in RDSPs  Exempt Asset o All withdrawals from RDSPs  Exempt Asset/Income for ODSP (but not for income tax)

Trusts – What is a Trust? A Trust is a bank account in which a person (the Trustee) holds the account for the benefit of another person (the Beneficiary) Sometimes the Trustee and Beneficiary are the same person o The Trustee must use the money in the Trust for the benefit of the Beneficiary o Certain Trusts fit under ODSP Asset and Income Exemptions o Money from a Trust* created from proceeds of a life insurance policy  Exempt Asset *To a Maximum of $100,000

Trusts – from an Inheritance o Money from a Trust* (Testamentary Trust) created through a Will  Exempt Asset o Inheritance money received by a Beneficiary directly and afterwards put into a Trust* (Shelter Trust) = Income in the month received and then is Exempt as an Asset *To a Maximum of $100,000

Trusts – Henson Trust An Inheritance of more than $100,000  is NOT an Exempt Asset because it is over the ODSP maximum limit o This means a person on ODSP would be found ineligible for ODSP benefits UNLESS o A Henson Trust had been set up, and o The Henson Trust MUST have been established in the Will

Trusts – Henson Trust A Henson Trust is also called a “Discretionary Trust” obecause the beneficiary has  NO control, nor access to the Trust  NO say over when money is removed from the Trust nor how much o Payments and control of the Trust are at the Absolute Discretion of the Trustee

Trusts – Henson Trust A Henson Trust established through a Will passes wealth on without jeopardizing a person’s eligibility or entitlement to ODSP benefits because of is discretionary nature o The Trustee administering the Trust must be aware of relevant ODSP legislation and policy directives o If the Trust allows, the Trustee can spend both the capital and income

Trusts – Henson Trust o A Henson Trust MUST be drafted properly to be absolutely discretionary o The Trust should state what happens to the Trust should the beneficiary die o For this reason, the Trustee should not be a family member who could then inherit the Trust

Henson Trust – Things to Think About The Trustee has a lot of power so consider: o Appointing more than one Trustee o How well the person knows the Beneficiary o Ability to manage Trust o Ability to understand terms of Will & Trust o Ability to understand ODSP Rules o Trustworthiness of the person The End