1. Financial Planning for People with Disabilities and their Families
Presented by:
Troy Mulvey & Lisa Whittleton
Financial Security Advisors
Your situation isn’t typical – the advice you receive shouldn’t be either.

2. Disclaimer
The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. 
Readers should consult with their own accountants and/or lawyers for advice on the specific circumstances before taking any action. 

3. A Solid Foundation for Financial Security Growth opportunities
(real estate, speculative investments, family and business legacy)
Controllable events
(opportunities, recreation, retirement, savings, home ownership, debt elimination)
Uncontrollable events
(job loss, emergencies, death, disability)

4. Disability Tax Credit: gateway to the RDSP
Provides:
a reduction in payable income tax by the disabled individual or transferred to their caregiver;
medical expense deduction that is not covered by any means.
Eligibility is based on the functional impairment of the patient, NOT the medical diagnosis.
Approval can be fast and easy, or long and hard.
CRA will back-date and review tax returns for up to 10 years or the onset of the disability.
Not only does this make you eligible for the RDSP, but it also provides money back to you or to your caregivers.
The application may take a few months to be approved so apply as soon as possible.
We will go over the process, but, depending on your disability, you may want to get professional help.

5. Activities of daily living
Speaking
Hearing
Walking
Elimination (bowel or bladder function)
Eating
Dressing
Mental functions for everyday life
adaptive functioning ie. personal safety, banking
memory  ie. simple instructions, personal information
problem-solving, goal-setting, and judgment together

6. PLUS ONE OF THE FOLLOWING
Eligibility
Must have a severe and prolonged impairment in physical or mental function lasting at least one year even with therapy, devices and medication.
PLUS ONE OF THE FOLLOWING
Markedly restricted in one activity of daily living.
Completely unable to perform 100% of the time.
Takes an inordinate amount of time (3x normal).
Cumulative effect in two+ activities of daily living.
Restrictions exist together.
ex1. A person walks 100m but then must recuperate.
ex2. Can only concentrate for a short period of time.
Significantly restricted (90% of the time)
Receiving life-sustaining therapy >14hrs/wk to support a vital function (ie. kidney dialysis).

7. * There may be a cost associated with this *
Application Process
Part 1 – completed by the person with the disability or their caregiver
Part 2 – completed by the appropriate practitioner.
specialist -- family doctor
optometrist -- occupational therapist
audiologist -- physiotherapist
speech/ language -- psychologist
pathologist
* There may be a cost associated with this *

8. Tips for Applicants Meet with the practitioner to:
explain the importance of the DTC/RDSP.
reinforce how the disability affects the activities of daily living.
If the practitioner does not seem receptive, go to another practitioner who is.
Provide suggested responses for the practitioner’s questions with the application.
Mail the application in yourself.
If your application is rejected:
DO NOT APPEAL
resubmit with additional information

9. The Registered Disability Savings Plan (RDSP)
Registered investment plan Launched in 2008 by the Federal Government Federal matching grants and bonds One account per beneficiary

10. Why open an RDSP? Financial security
Peace of mind for other family members
No impact on any other federal or provincial disability benefits (asset or income)
Grants and Bonds
Less personal contribution needed
Accelerated growth of savings
No restriction on how the money is used when withdrawn

11. Qualifying for the RDSP
Recipient of Disability Tax Credit
Less than 60 years of age
Canadian Resident
Valid Social Insurance Number

12. “Accountholder” versus “Beneficiary”
Accountholder: the individual(s) who establishes the plan and has principal decision-making abilities.
Must be over age 18 and contractually competent.
If not, someone legally authorized to act for the beneficiary must be the accountholder.
Can be held jointly between parents or between parent(s) and the beneficiary.
Beneficiary: the disabled individual who would be the recipient of the funds invested in the RDSP.

13. Putting Money In Contributions can be made by anyone.
Contributions can be made until the beneficiary reaches age 59.
Tax-deferred rollovers of RRSP/RRIF/RPP/RESP.
Maximum lifetime contribution limit of $200,000.

14. Eligible Transfers
Transfer of RDSP from one financial institution to another.
location
quality of service
fund performance
Rollover of RRSP, RRIF or RPP from deceased parent or grandparent.
Save on estate tax
Taxable to the beneficiary when withdrawn

15. Rollover of RESP RESP opened prior to becoming disabled.
Tax-deferred rollover to RDSP is allowed but not ideal.
Rollover will NOT attract grants.
any Canada Education Savings Grant or Canada Learning Bond will be repaid to the federal government.
Contributes to total RDSP contribution room.
Better option:
Withdraw funds
Repay all grants and bonds
Pay 20% penalty on any interest accrued
Re-contribute to RDSP and attract grants
Implications:
RESP contributions will be returned to the subscriber on a tax-free basis.
If the subscriber chooses they can contribute some or all of these contributions to the RDSP and will attract grant.
Any Canada education savings grants or Canada learning bonds in the RESP will need to be repaid to HRSDC.
The rollover amount will not be subject to regular income tax or the additional 20% penalty tax that would normally apply on an AIP paid to an RESP subscriber.
The rollover will impact RDSP contribution room
The rollover is considered a private contribution but will not attract grants
When withdrawn from the RDSP it will be taxable.

16. Canada Disability Savings Grant (CDSG)
Contributions may qualify for matching
Eligible until December 31st at age 49
Maximum lifetime CDSG is $70,000
Family Net Income* CDSG matching rates Max. annual CDSG
$89, 401 or less % on first $500 $3,500
200% on next $1,000
Over $89, % on first $1,000 $1,000
The Canada Disability Savings Grant (CDSG) is a federal program that provide payments to RDSPs to encourage long-term savings through an RDSP. Grants are available to beneficiaries up until December 31st in the year they reach age 49.
Contributions can be matched, based on family income up to $70,000.
Family income is based on:
Where the beneficiary is a minor, the family’s net income
Where the beneficiary is an adult, the beneficiary’s net income (and spouse, if applicable)
*2015 rates (indexed annually to inflation).
For a minor beneficiary, the family net income is that of his or her parents.
Where the beneficiary is over the age of majority, the family net income is that of the beneficiary and his or her spouse, if applicable.

17. Canada Disability Savings Bond (CDSB)
No personal contribution needed
Eligible until December 31st at age 49
Maximum lifetime CDSB is $20,000
Family Net Income* Maximum annual CDSG
$26,021 or less $1,000
Between $ 26,021 and $44, $1,000 reduced on a prorated basis
Over $44, No CDSB is paid
Bond monies are available until December 31st of the year the beneficiary reaches age 49.
Available to beneficiaries whose net family income is less than $43,561
Maximum annual CDSB - $1,000 for family income below $25,356
Smaller amounts of CDSB for family income between $25,356 and $43,561
Maximum lifetime CDSB is $20,000
Family income is based on:
Where the beneficiary is a minor, the family’s net income
Where the beneficiary is an adult, the beneficiary’s net income (and spouse, if applicable)
*2015 rates (indexed annually to inflation).
For a minor beneficiary, the family net income is that of his or her parents.
Where the beneficiary is over the age of majority, the family net income is that of the beneficiary and his or her spouse, if applicable.

18. Taking Money Out Lifetime Disability Assistance Payment (LDAP)
an income stream that can begin at any age but no later than Dec. 31 of the year the beneficiary turns age 60.
minimum/maximum withdrawal amounts.
Once begun, must continue until the funds are depleted or death of the beneficiary.
2. Disability Assistance Payment (DAP)
lump sum withdrawal prior to starting the LDAP.
lump sum withdrawal in excess of the LDAP maximum.
can be requested at any time.
Withdrawals are made up of a portion of contributions (capital), interest, grants and bonds.
No restriction on use.
We’ve talked about putting money into the RDSP – now what about accessing the funds for the beneficiary?
There are two types of withdrawals (payments) from an RDSP:
Lifetime Disability Assistance Payments (LDAPs) – recurring annual payments that continue until the beneficiary’s death. Payments can begin at any age but must commence by the end of the year in which the beneficiary turns age 60
Disability Assistance Payments (DAPs) – periodic lump sum payments that can be paid to the beneficiary any time after the RDSP is established.
RDSP withdrawals are made up of contributions, income growth, and grants and bonds.

19. Proportional Repayment Rule
If money is withdrawn within the last 10 years from the last grant/bond deposit, the accountholder must repay the lesser of the following amounts:
$3 for every $1 that is withdrawn; OR
all grants and bonds that have been paid into the RDSP within a 10 year period
These payments may be subject to the Proportional Repayment rules.
This is one of the biggest reasons I hear of why people do not open RDSPs however the rules have changed since the RDSP was first introduced in 2008.
Previously, whenever a withdrawal was made from the RDSP, ALL grants and bonds that had been paid into the account over the last 10 years would have been repaid. This is a long holding period, especially when you consider the fact that for some disabled people this can literally be a lifetime.
In January 2014, the new rule came into force. Under this new rule, instead of having to repay all grants and bonds that have been contributed to the account over the last 10 years, the ratio is $3 of of grant/bond monies for every $1 withdrawn.

20. Example
Jeff opens an RDSP in 2009 and contributes $1,500 annually in order to get the maximum amount of grants ($3,500) per year. In 2014, Jeff withdraws $600 from his RDSP.
Assistance holdback amount (old rules):
Jeff would repay the full $21,000 ($3,500 x 6)
Proportional repayment rule (effective Jan. 1, ):
Jeff would only be required to repay $1,800 ($600 x 3)

21. Termination of DTC eligibility
RDSP may remain open when beneficiary becomes DTC ineligible
Medical practitioner certification required
No contributions can be made
No new grant or bond entitlements
Withdrawals permitted
Can re-contribute if approved for the DTC in the future
When someone is no longer DTC eligible they can complete a prescribed form that allows them to elect to keep the RDSP account open. A written certification from a medical practitioner must be included with the election.
RDSP will remain open but no contributions are permitted to the plan
no CDSG or CDSB will be paid into the RDSP
no new entitlements will be generated for the purpose of the carry forward of CDSG or CDSB
Withdrawals are permitted from RDSP
When the beneficiary becomes DTC eligible again the regular RDSP rules will apply to the account beginning in the year the beneficiary became eligible again.

22. Impact on Social Assistance Benefits
An income stream or withdrawal from an RDSP does not impact other asset or income-tested federal government programs, including:
Old Age Security (OAS)
Guaranteed Income Supplement (GIS)
Canada Pension Plan (CPP)
The Goods and Services Tax Benefit (GST Benefit)
Social assistance benefits
Ontario Disability Support Program (ODSP)
Asset Test: $5,000 single / $7,500 family
Income test: $6,000 annually
Some people wonder why an RDSP can be opened until age 60 when you can only get grants and bonds until age 49. One of the major reasons is that withdrawals from an RDSP will not have a negative impact on eligibility for programs such as the Ontario Disability Support Program (ODSP), subsidized housing and long-term care. In addition, there is the benefit of tax-sheltered growth and the income stream can start right away.
Each province and territory has legislation that provides support to persons with disabilities.
The asset test and income test in Ontario is: READ SLIDE

23. Death of the Beneficiary
RDSP will be closed
CDSGs and CDSBs received in last 10 years will have to be repaid
Net proceeds to estate of beneficiary
Under beneficiary’s will OR
If no will, through provincial rules
Tax on proceeds included in final tax return of the beneficiary
If the beneficiary dies, the RDSP will be collapsed and full proceeds of the plan will be paid to the beneficiary’s estate. The proceeds will be subject to the Proportional Repayment rules once again.
Original contributions remain non-taxable, while CDSGs and CDSBs and investment income received will be taxed as ordinary income to the beneficiary’s estate.
The beneficiary, or their Trustee, should make a provision in the beneficiary’s will for the distribution of the assets so there is greater control over the intended distribution.
If the beneficiary dies without a will, it could lead to unintended distributions, particularly if the beneficiary has a preference that non-related individuals inherit.

24. Segregated Funds Sold exclusively by insurance companies
Investment product similar to mutual funds except:
Principle is guaranteed
Guaranteed death benefit
Creditor protection
Not subject to probate fees
Combines the growth potential of a mutual fund with the security of a life insurance policy
No restrictions on use when withdrawn
ensure to stay below the income/asset limits
Provides a guarantee to protect part or all of the money you invest (75% to 100%).
Your beneficiaries will receive 75% to 100% of your contributions tax free when you die. This amount is not subject to probate fees if your beneficiaries are named in the contract.

25. $100, 000 Exempt from Asset Test
Personal contributions
Proceeds received as damages or compensation for pain and suffering due to injury
Expenses actually or reasonably incurred or to be incurred as a result of injury
Loss of care, guidance and companionship due to an injury
Inheritance
Life insurance proceeds

26. Henson Trust aka Absolute Discretionary Trust.
A clause or provision contained within a will.
Assets held by a trustee for the benefit of a beneficiary.
As of Jan. 1, 2016, must be approved for the DTC to have a Henson Trust.
No maximum amount of assets.
Residual or secondary beneficiaries can be named if beneficiary passes away before all assets are used.
Funds can be paid to beneficiaries at anytime.
If the $100, 000 limit of the segregated fund will be exceeded, establishing an Inter vivos Henson Trust protects a disabled person’s assets from affecting their disability assistance payments.