WHEN A FAMILY MEMBER NEEDS SPECIAL CARE

When you raise a child who has special needs or look after another family member with a disabling medical condition, you spend a lot of extra time providing care. If you also take on the extra financial matters that are involved, it can just be too much. We encourage you to ask for our assistance, so we can make things smoother for you and help improve your family member’s quality of life.

Supporting a child with special needs

When a child has a severe and prolonged impairment in physical or mental functions, it’s important to apply for the federal disability tax credit, which involves submitting a form completed by you and a qualified medical practitioner. The credit provides substantial tax relief and can be transferred to a parent when not claimed by the child. Approval for the disability tax credit is also required to access the child disability benefit, Registered Disability Savings Plan (RDSP) and a qualified disability trust, among other benefits.

Talk to us or your tax advisor about other related tax credits and deductions. Note that if you’re claiming the Canada Caregiver Credit (CCC) without the disability tax credit, you should keep on hand a signed statement from a medical practitioner noting your child’s dependence on others for care.

A critical financial planning measure is ensuring your child is taken care of after your passing. We’ll work with you to determine the funding sources to support your child, which could be savings in a Registered Disability Savings Plan (RDSP) or other dedicated investments, life insurance proceeds, sale of your principal residence, or funds rolled over from a registered plan. Typically, a trust is established. This may be an absolute discretionary trust, which enables a beneficiary to receive trust income without jeopardizing provincial disability benefits. Or it may be a qualified disability trust that receives favourable tax treatment. In some cases, a trust can be both types.

Caring for a spouse

You’ll first want to explore any benefits your spouse may be entitled to receive. For example, the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) offer a disability benefit for eligible individuals under age 65 who have a severe and prolonged illness or condition that prevents them from working. When a spouse has a disability and is unable to work, financial planning is most affected when she or he had been contributing significant amounts to retirement savings. You may need to alter your retirement plans by saving more, postponing retirement or modifying your retirement lifestyle. Also, make certain you have proper life, disability and critical illness insurance, as your spouse largely depends on your income.

Helping a parent

When you’re caring for an elderly parent, you might require our financial advice for yourself and your parent. You may want to determine whether the lower-income spouse can leave his or her job to care for the parent without disrupting your investment goals. And if your parent wishes to remain at home but cannot afford private care, we can help you figure out if that’s an expense you can take on.

If an elderly parent begins to lose cognitive abilities and needs help managing financial affairs, you may not know where to begin. We can take you through all the steps, from assessing your parent’s financial situation and getting power of attorney, to applying for the disability tax credit and becoming your parent’s tax representative.

THE REGISTERED DISABILITY SAVINGS PLAN (RDSP)

The Registered Disability Savings Plan (RDSP) is a savings and investment vehicle designed to provide long-term financial security for Canadians with disabilities. To qualify, a beneficiary must be approved for the disability tax credit by the Canada Revenue Agency (CRA). The plan holder who establishes the RDSP can make annual contributions of any amount, with a lifetime contribution limit of $200,000. Contributions to an RDSP grow tax-deferred, though they are not tax-deductible. When funds are withdrawn, the beneficiary is only subject to tax on grant money and investment income – actual contributions are not taxable.

Canada Disability Savings Grant. When you make annual contributions to an RDSP, the Canada Disability Savings Grant matches a portion of the amount. The grant amount is based on the beneficiary’s family income, with a maximum grant amount of either $3,500 or
$1,000 per year, up to a lifetime maximum of $70,000

 

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