When planning their estates, parents of children with disabilities face unique challenges. In many cases, after a child with a disability becomes an adult, the parents must continue to make financial and personal care decisions on behalf of the child.
Additionally, if your child has special needs, it is important to plan now to ensure that his or her needs are met in the event of your death or incapacity. Following are some options for achieving these goals.
If your child is eligible for the Disability Tax Credit (DTC), then you can set up a Registered Disability Savings Plan (RSDP) and contribute to the plan until the end of the year in which your child turns 59. In fact, anyone who wants to help can contribute to your child's plan.
The federal government also contributes to the RSDP through the Canada Disability Savings Grant and the Canada Disability Savings Bond. There are eligibility requirements for the grant and the bond, and if you have questions about eligibility for either, it is best to speak with an estate and financial planning professional.
Note, too, that contributions to the RSDP are not tax-deductible, and earnings accrue tax-free until withdrawn.
Generally, when an RSDP beneficiary withdraws the funds and declares them as taxable income, the beneficiary's eligibility for provincial disability benefits is not affected.
Other options for providing for a child with special needs include creating a trust and getting life insurance. For more on these matters, please see Hagel Lawfirm's overview of setting up and administering trusts.