Why is Estate Planning for Disabled Beneficiaries so Important?
Planning for the future is critical for parents or guardians with dependent children, or adult children with disabilities that either live at home, or live separately but are still dependent on their parents for support. With Canadians living increasingly longer lives, and health care and living expenses are growing at an ever-faster pace, understanding who will care for your disabled child when you can no longer do so, is critical for a parents who want peace of mind. Responsibility for the care of a dependent child or disabled adult often falls upon other family members and/or the community when a parent is unable to continue in that role. Siblings and family members who may be entrusted with the primary caregiver responsibility for a disabled or incapacitated child or adult, will appreciate and benefit from the creation of a comprehensive plan for the future.
If one of your beneficiaries is a recipient of payments under the Ontario Disability Support Program (ODSP), or if there is a possibility that they may receive such payments in the future, then special provisions must be included in your estate plan in order to preserve their ODSP entitlements. Under the ODSP regulations, there are very strict rules concerning assets and income. If a beneficiary is likely to receive an inheritance that will cause them to exceed the allowable limits, then it is crucial that their inheritance is directed into a special trust known as a Henson Trust. The trustee is given the absolute discretion to provide money from the trust to the beneficiary as needed but because the beneficiary has no control over the money in the trust, their ODSP entitlements are protected.
In addition to the Henson Trust, there are also a number of other types of assets which are exempt when determining eligibility for ODSP. Registered Disability Savings Plans (RDSPs) may be established by a disabled person (or by a parent or legal representative if they are minors or incapable) provided they qualify for the Disability Tax Credit. There are very specific provisions which govern private contributions and government contributions which may be made to the RDSP. An important feature is that a deceased parent’s RRSP/RRIF may be rolled over into the child’s RDSP on a tax-free basis. An Inheritance Trust (sometimes called a Disability Expenses Trust or Protective Trust) may be set up by an ODSP recipient with funds that they have received from an inheritance or life insurance policy. They will still qualify for ODSP provided there is less than $100,000.00 in the trust at all times.
Estate Planning for Disabled Individuals
Quinn Estate Law can help you to prepare a long-term estate plan for your dependent loved one. Children and adults with disabilities and special needs are entitled to benefits from government programs and services that can alleviate the financial and other pressures faced by a parent or caregiver. Our expertise is in maneuvering the plethora of available social services, financial aid programs, and private wealth management and financial planning vehicles necessary to ensure a secure financial future for disabled adults and dependent children.
Together we can create a plan that ensures you and your dependents receive the help you are entitled to, even when you are no longer able to provide care yourself due to disability or death. We’ll ensure all your most important issues are identified and addressed, including:
- Who will care for your loved one when you are not able to
- How to maintain eligibility for government and private benefit programs and financial aid for dependent/disabled children and adults
- Structuring and implementing the most appropriate estate plan for your financial assets