01 October, 2016 Financial Planning

Why You Or Your Loved One with Special Needs Should Have An RDSP

Saving money for yourself can be challenging and saving money for a disabled child can be even more challenging. This is why an RDSP can aid you and your loved one with special needs, and help secure your family’s future financially. Having an RDSP for you or your loved one comes with many benefits to the economy and future taxpayers, the beneficiary, and the caregiver.

The Economy & Future Taxpayers

The markets will benefit from you acquiring an RDSP for your child because you are investing in the economy. Taxpayers also benefit from RDSPs – as a long-term investment they will help cover the future caregiving costs and needs of people with disabilities/special needs with old tax dollars when the caregivers are gone.

The Beneficiary

The full value of the money set aside in an RDSP becomes part of the beneficiary’s estate once the 10-year period is up. This is valuable to the beneficiary, for without an RDSP, in Ontario, they can only have a total of $5,000 invested without it affecting their government benefits. However, if you have an RDSP, it can potentially allow for $290,000 plus growth. Contributions made to the RDSP are not tax deductible but grow tax deferred until withdrawn. At that time the government portion and growth is taxable at the beneficiary’s tax rate. Contributions can be made until the beneficiary turns 59. Government Bonds and matching Grants are available to age 49.

The Caregiver

An RDSP is great for the caregiver as well. If the caregiver is no longer present, they now know there are potentially substantial assets to take care of their loved one. These assets can be used to purchase, but are not limited to housing, medical, and caregiving expenses. Having this plan will benefit you even when you’re no longer around - giving you peace of mind. Contact us to begin securing the financial future of your loved one.