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Security for a loved one with a disability

Family members who care for an individual with a disability often worry silently how their loved one’s needs will be paid for in the years ahead. Canada’s Registered Disability Savings Plan (RDSP) can provide peace-of-mind, since it offers a way to save for these future expenses.

Providing financial security for a person with a disability can seem like a daunting task. First, depending on their health, they may require costly treatment or care that could increase with age. Also, their disability may prevent them from saving for their own retirement.

Adding to the challenge: while they may qualify for the federal Disability Tax Credit and other supports, these public programs can sometimes be ‘clawed back’ if an individual’s income exceeds a certain threshold.

An RDSP can help you overcome these issues. Similar to a Registered Education Savings Plan (RESP), you can make contributions to this account and hold many types of investments.  The income from the account is not taxed until the funds are withdrawn.

As an extra bonus, your contributions may qualify for additional government payments through the Canada Disability Savings Grant, up to a lifetime maximum of $70,000 per beneficiary. Even low income families who cannot afford to contribute can also receive up to $20,000 from the Canada Disability Savings Bond.

Most importantly, the funds drawn from the account will have no impact on the disabled individual’s government benefits such as Old Age Security, Canada Pension Plan, GST/HST credits, etc.

The RDSP can be a great vehicle for family or friends to rally around their loved one with a disability. Anyone can contribute to the account once it is established and written permission is given by the account holder, who may be a legal parent, guardian or the beneficiary, themself.

As with investing through other tax sheltered savings plans, it’s wise to begin contributing to an RDSP early to maximize account growth over time.

To learn more about RDSPs and other options, contact our office. Our team can help you take an integrated approach to your family’s financial, estate and tax planning needs, giving you confidence that you've planned for your loved one’s financial security.

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