It seems that every time a representative of the “Special Needs” Planning Group meets with a family to share information, we learn something new. As a result, we have collected a great deal of information that is useful to families with members with a disability. The following section contains summaries of some of those pieces of useful information. For a more extensive array of information, contact the “Special Needs” Planning Group.
Over the last few years, an alarming number of people have contacted The “Special Needs” Planning Group regarding the use of Will Kits. These Kits are advertised heavily in print and on the radio at very low cost. The advertisements imply that a family can replace the use of a competent lawyer to complete their Will by simply filling in the blanks on the Will questionnaire. The concern of many lawyers is that these kits may not ask the right questions regarding planning for people with disabilities. Our examination of Will Kits has yet to uncover any questions concerning the Henson Trust or items relating to disability issues like the Ontario Disability Support Program. Therefore, we do not recommend the use of the Will Kits as part of the planning process for people with disabilities. Instead, we would recommend that people retain the services of a lawyer who specializes in or is very familiar with planning for people with disabilities.
As another point of note, people should not postpone completing their Wills simply because of not knowing the name of a Lawyer who specialize in this area. If you would like to receive a list of lawyers who are knowledgeable in this field, contact The “Special Needs” Planning Group and we would be happy to provide a list of lawyers who you can interview to assess whether or not they meet your requirements.
Submitted by S. Treeby, the grandparent of a grandchild with “Special Needs”. For more information about planning for the disabled grandchild, contact The “Special Needs” Planning Group at: (905) 640-8285 or (905) 898-2344 or in writing at: 70 Ivy Crescent, Stouffville, Ontario, L4A 5A9.
Does one of your children have a child with “Special Needs”? As Grandparents, we often set up our Wills so that our grandchildren will share in our estates after we have gone. In most situations, this works out to be a means of providing a legacy to our grandchildren but when a child with special needs is involved, our sincere generosity can turn out to be a nightmare for the very child that we intend to help.
Our problems start with the fact that our grandchildren with disabilities receive financial support from the provincial government. This support is provided through the Ontario Disability Support Program. The ODSP is only available to people over age 18 who do not have money of their own. Currently, if an person has liquid assets as defined by the ODSP in excess of $40,000, they are not eligible for the monthly disability cheque, the drug card, the dental card or other benefits associated with the program. Therefore, when we leave money to these special people, it can in fact terminate their entitlement to the ODSP and other government benefits. Money left to enhance the quality of life that our grandchildren could, in reality, reduce their well being by terminating their ODSP benefits.
Through the use of appropriate planning techniques, we grandparents can have the Peace of Mind of knowing that our grandchild with special needs will always have the quality of life that they deserve. The most commonly used vehicles are the Henson Trust and the RDSP. A Henson Trust, can be created in our Wills and can be funded from our estates. It will protect our grandchild’s entitlement to the ODSP. We can also provide money to the RDSP which will generate generous matching from the Federal Government. The RDSP can eventually provide “little bit extra” to enhance their quality of life without affecting any government benefits.
The “Special Needs” Planning Group was especially established with the purpose of assisting families in providing a future of financial security for their children or grandchildren with special needs. The founders of The “Special Needs” Planning Group have dedicated more than twenty years to the creation of plans to provide for people with “Special Needs”. If you are concerned about providing a gift to your grandchild, give them a call for a free, personal consultation.
They can be reached at (905) 640-8285 or at email@example.com
In some circumstances, people with disabilities who are receiving ODSP benefits want to save for the future. The RDSP (see the RDSP tab for further details) has become one way in which to save money for senior years but there is another option. Under the ODSP regulations, a person can own an investment called a Segregated Fund with a value of up to $100,000 and still qualify for ODSP benefits. The Segregated Fund up to $100,000 is not considered to be a liquid asset and therefore is not subject to the ODSP $40,000 limit.
Segregated Funds are a Life Insurance product which is managed by a professional fund manager in a manner similar to mutual funds. As with mutual funds, an investor’s money is pooled with the contributions of other investors to purchase a portfolio of securities. The value of the units purchased is based on the value of the securities and will change in response to market conditions. A Segregated Fund also can offer additional benefits like Maturity and Death Benefit guaranteed minimum payout amounts, Potential Creditor Protection and Probate Fee Exemption. Once a person reaches age 65, the ODSP terminates and therefore there are no regulations surrounding the spending of the money in the Segregated Fund.
Another interesting feature of Segregated Funds is that they can be used to shelter inheritances received directly by the person receiving ODSP benefits. Rather than placing these inheritances into an Inheritance Trust, a person could acquire a Segregated Fund. The income earned in the fund will not be taxed at the highest marginal tax rates as it would be in the Inheritance Trust.
For more information on Segregated Funds and how they relate to people with disabilities, contact Graeme Treeby at The “Special Needs” Planning Group.
The process of applying for benefits under the Ontario Disability Support Program is often a difficult and frustrating exercise primarily because people don’t know what to expect. People don’t realize that even making a simple telephone enquiry may cause the opening of a file under your name or the name of the person with a disability and the nature of your enquiry can be used against you during the actual application process. Also, many people do not have their affairs and the affairs of their family members with a disability in order with respect to the requirements of the ODSP program before they set up initial contact with the ODSP office. The ODSP allows for adjustments to be made to some of the financial asset levels but they need to be done before the application for benefits begins.
During the intake process, it has been my experience, that many questions are answered without careful consideration and in some cases, this leads to vital information being left out of the application. All of these difficulties can be avoided by preparing ahead of time. This is when a meeting with a Planning Professional can save you hours of additional work and heartache. The Planning Professional can help you restructure the affairs of the person with the disability, offer suggestions as to the wording of various responses to intake worker questions and generally put you mind at ease during the entire process.
Recently, our office has received quite a number of requests for information regarding the maximization of ODSP benefits for people who are living in the family home. It seems that some people are receiving information indicating that they can increase their child’s entitlement from $881 per month to $1151 by simply entering into a rental agreement in which the parents become the landlord and the child becomes the renter. Under a rental arrangement, the maximum benefit could be increased to $1151. Further, people are under the impression that the ODSP requirement for this to work is that their child need only be “capable” of purchasing his or her own food and be “capable” of cooking their meals, even with some assistance or on an infrequent basis. This sounds too good to be true and in many cases, it is not. When we explored the issue in depth with the Policies Branch of the ODSP, we discovered several important things.
In a letter from Debbie Moretta, Former Director, Ontario Disability Support Program, the following information was revealed:
“To be considered a renter, a recipient does not necessarily need to be living in self-contained quarters, but must purchase and prepare his/her own food. The landlord is not involved, directly or indirectly, in facilitating the provision of meals to the recipient. The recipient is solely and completely responsible for obtaining meals and can make choices as to how meals are obtained/prepared. (emphasis added) If the landlord is responsible for providing the food, the recipient is considered a border.”
Furthermore, under Directive 6.3 of the Ontario Disability Support Program Policy Directives, it states that: “If the recipient purchases and prepares food separately for himself/herself and his/her dependants, then the recipient is in a rental situation.”
What this all means is that if we as parents prepare the meals for our family and our family member with a disability sits with us and enjoys those meals, then we are not in an rental arrangement as defined by the ODSP regulations and our child is not entitled to the increased ODSP amounts. If you are considering entering into one of these rental agreements, proceed with caution. Be certain that your child fits into the category of renter since the ODSP can and will demand that overpayments of benefits be reimbursed and in some cases may initiate fraud investigations.
Over the last few years, a large number of companies in Canada have discovered a way to relieve you of your money. They realize that people are not fully aware of the Disability Tax Credit and the fact that it can be used to reduce a person with a disability’s taxable income and thus create an income tax refund. If the person with the disability doesn’t need the credit due to low or non-taxable income, the DTC can be transferred to a supporting family member. These companies advertise that they can get up to $40,000 in refunds for you and all they will charge for doing so is up to 30% of the refund. On a $40,000 refund, they would be paid $12,000. How do they “earn” this percentage? They get your doctor to fill out a T2201 form from Canada Revenue Agency and then ask CRA for the refund. You can do this yourself for the cost of a postage stamp or you can pay them up to $12,000…the choice is yours. If you need assistance, The Special Needs Planning Group has a list of Accountants who can prepare the CRA request for a couple of hundred dollars. Contact us and we will share the names with you.
Mutual funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc.
Insurance products are offered through PPI Management Inc., a national licensed insurance marketing organization that support independent advisors with their business, and through multiple insurance companies.