The goal of estate planning is to ensure you and your dependants are protected from risks during your lifetime and to plan for a smooth transition of assets to heirs upon your death, while minimizing tax. If you have dependants, especially one with a disability, you'll want to keep your will updated, including named guardians for any dependants. If you are a primary income earner in your family, you’ll also want to consider life, disability and critical illness insurance for yourself, as well as long-term care (LTC) insurance to help pay for your own care later in life, if needed and preserve your estate for your heirs.
Continuing powers of attorney for property and personal care should also be in place in case a family member or other caregiver becomes mentally incompetent and is unable to make decisions for themselves or on behalf of a disabled relative.
Discretionary trusts have often been used to meet the needs of an individual with a disability while also preserving government disability payments. However, for many families, the RDSP and related grants as part of a well-thought-out plan may provide much of the resources needed to support the individual through life. Until RDSP contributions are maximized, parents could include a bequest in their wills to top up the plan. Thanks to changes in the 2010 federal budget, the RRSPs and RRIFs of deceased parents or guardians may now be rolled over tax free to an RDSP, within the disabled individual’s limits. The rules and conditions are complex, so professional advice is needed when incorporating an RDSP into your estate plan.
The main advantage of a discretionary trust versus an RDSP is that a trust can have multiple beneficiaries while the RDSP can have only one, and on the death of that beneficiary the funds must be paid to the individual’s estate. A trust provides the opportunity to share assets with other family members, according to your instructions.
To learn more about these and other strategies geared to families living with a disability, please contact one of our professionals at IPC. We would be happy to provide a complimentary financial review and point out strategies which could be of value.
Working in partnership together, we can build a plan for all of your loved ones and bring peace of mind and comfort to everyone in the family.