Providing for a Disabled Family Member's Future

Planning for the future of a disabled family member can be a stressful endeavor for parents and relatives. While there's an overwhelming abundance of information out there, it's not necessarily obvious what each individual qualifies for. Parents or caregivers often feel taxed enough by the emotional and physical demands that can come with caring for a mentally or physically disabled person.

I recently spoke with Chris Das, a Sun Life Financial Advisor, and asked him to break down and simplify some key strategies that can help Canadian parents provide for a disabled child.

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Das advises three ways you can start to secure the future of your loved one:

1. An RDSP
The Registered Disability Savings Plan helps parents and other family members save for the long-term financial security of a loved one with disabilities. Canadian residents under age 60 who are eligible for the Disability Tax Credit can apply. Contributions grow tax-free until money is taken out. Although only parents or guardians can open an RDSP for a minor, with written permission from the "holder", anyone can contribute.

There are government grants that could be credited into this savings account -- the government will match contributions made and will also contribute on behalf of people with low family incomes depending on each situation. It is important to look into applying for the Canada Disability Savings Grant and for the Canada Disability Savings Bond to see if you're eligible. An extra perk with growing an RDSP is that it will not alter most income benefits. The RDSP is a vehicle to save money for a disabled child which he could use down the road.

2. A Henson Trust
This is a fund set up for a disabled child so that when she receives an inheritance or other assets, she remains eligible for the government programs she's enrolled in.

Confused? Here's an example of what the Henson Trust protects against:
Sally has a disability which means she is eligible for government support programs like having a support worker or accommodation funded by the government. Suddenly her Uncle. Jim passes away and leaves her with a million dollars. With so much money at her disposal, Sally is suddenly not eligible for the government programs.

But eventually the money runs out and Sally needs to apply for all of the government funding again without Uncle. Jim around to help her. The Henson Trust is designed to protect the disabled child's assets (especially if she will inherit some money) and at the same time protect her rights to government benefits.

3. Plan For Your Own Situation and Educate Yourself
If you have a disabled child, Das says it's especially important to ensure your own situation is well taken care of, meaning you have adequate life insurance in place in case the main breadwinner of the family suddenly passes away or becomes ill. If you find it difficult weaving all of your needs together, sitting down with a financial advisor could be helpful. The more you know and understand, the more you can help your disabled dependent.
An accountant can also help by informing you about tax credits you might not know about and a lawyer can draw up a will or advise about the Henson Trust. Reaching out to experts may mean you have to forgo a home renovation or a new flatscreen TV this year, but will be well worth it once you have a solid financial plan in place for your loved one.