Financial Planning for a Child With a Disability
If you are raising a child with a disability, you may carry a question that feels bigger than most: what happens to my child when I am no longer here to help?
It is a deeply human question, and it comes from love. The good news is that you do not have to solve everything at once. Canadian families have a few important planning tools that can work together like building blocks. You can put them in place one at a time, at your own pace. Here is a simple roadmap to help you see the bigger picture.
Start With the Disability Tax Credit
For many families, the first building block is the Disability Tax Credit, often called the DTC.
The DTC is a federal tax credit for people with a severe and prolonged impairment. In plain language, it can help reduce the amount of tax a family owes. Just as importantly, it often serves as a gateway to other programs and planning opportunities, including the Registered Disability Savings Plan.
To apply, a qualified medical practitioner must certify your child’s condition on the required form and submit it to the Canada Revenue Agency. If your child does not have the DTC on file yet, this is often the best place to begin, because so much of the rest of the plan may depend on it.
Build Long-Term Support With the RDSP
Once your child qualifies for the DTC, you may be able to open a Registered Disability Savings Plan, or RDSP.
Think of the RDSP as a special savings account built for one purpose: helping support your child in the future. What makes it especially helpful is that the government may also contribute to the plan through grants and, in some cases, bonds. For families with lower income, those government additions can make a meaningful difference over time.
The exact amounts and rules can change, so it is always best to check the current details. But the big idea is simple: the RDSP is designed to grow quietly in the background and become a source of support later in life.
Protect Provincial Benefits
Here is where many families need to slow down and plan carefully.
Many adults with a disability receive monthly income support or disability assistance from their province. These programs often have limits on how much income or how many assets a person can have. If your child were to receive a large amount of money directly, such as an inheritance, it could push them over those limits and affect the benefits they rely on.
This is one reason families often look at a discretionary trust, sometimes called a Henson trust. In this kind of trust, the money is held and managed by a trustee rather than owned directly by your child. Because your child does not legally control the assets, the funds may not count against them for means-tested provincial benefits, depending on the province and how the trust is set up.
In simple terms, a trust can help you leave money to your child without accidentally taking away support they already depend on.
Make Sure Your Own Plan Can Carry the Load
So far, we have focused on your child. Now it is time to talk about you, because your plan only works if it can keep going when life changes.
This is where your own insurance becomes important. Life insurance can provide a lump sum after a parent dies. Disability insurance can replace part of your income if you become unable to work. Together, these tools can help make sure there is money available to support your child’s care plan no matter what happens to you.
There is also an important detail to think about when naming beneficiaries. It can feel natural to name your child directly, but for a child with a disability, that may create the same benefit issues mentioned above. Many families instead direct those funds to the trust, so the money is managed in a way that supports the child while helping protect other benefits.
Pull Everything Together With a Will
The final building block is a will, and it is the piece that helps hold everything else together.
Your will is where you can create the trust, direct assets and insurance proceeds, and name the people who will step into key roles after you are gone. You can name a guardian, who would care for your child if they are still a minor. You can also name a trustee, who will be responsible for managing the trust money carefully over time. Choosing the right people for these jobs is one of the most thoughtful decisions you can make.
When your will lines up with your RDSP, trust, and insurance planning, all the pieces work together much more smoothly. That is the goal: not perfection, but a plan that is clear, durable, and supportive.
Take One Step at a Time
You do not need to finish this roadmap today. In fact, for many families, the best first step is simply checking whether the DTC is already in place.
From there, you can begin building the rest of the plan with more confidence and less pressure. Each piece you put in place is one more layer of security for your child, and one more layer of peace of mind for you.
This article is for general information only and is not intended to provide legal, tax, or investment advice. Families should speak with qualified professionals before making decisions about disability planning.
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