Dollars and $ense – Supporting children with special needs
New parents have the expectation that their child will grow and thrive and one day leave the nest – but for some parents, that day will never come. They are the parents of children with special needs who will always be dependent to some extent.
Children with special needs are those with physical disabilities, chronic conditions, intellectual disabilities, emotional problems, activity limitations or learning disabilities.
Your child’s needs are constant and very expensive – for everything from medications, mobility aids and assistive devices, to 24/7 hands-on care. Your child may never be able to earn an income so can’t help out financially. You love your child and would do anything for them – but how can you cope with all the financial and emotional stresses now and in a future when you may not be around? Disability financial assistance is available from a number of federal/provincial/territorial sources. Here are some:
Disability Tax Credit can be transferred to a parent when a child has severe and prolonged mental or physical impairments and the child cannot utilize the full amount of the credit.
Medical Expense Credit can provide some tax relief for parents of disabled children.
Provincial Assistive Devices Programs provide assistance for both basic and personalized assistive devices.
Provincial Home and Vehicle Modification Programs provide basic home/vehicle modifications for disabled children and adults.
Provincial social assistance programs with an income support component, such as the Ontario Disability Support Program, may be available to your child.
Plan for the future when your disabled child is past retirement age or when you may no longer be there to help:
A Registered Disability Savings Plan (RDSP) is similar to an RRSP in that it is intended to help save for long-term financial security, though specifically for beneficiaries who are
eligible for the Disability Tax Credit. Unlike contributions to an RRSP, RDSP contributions are not tax deductible. However, income earned in an RDSP is similarly tax-deferred until paid out to the beneficiary. RDSP contributions can be made until the end of the year in which the beneficiary turns 59, with an overall lifetime contribution limit of $200,000 per beneficiary.
Set up a trust either during your lifetime or through your will, or purchase an insurance policy – but be sure the trust or policy is structured correctly so that the income from it
does not disqualify your disabled child from income or asset tested benefits.
Have a valid will that names your child as a beneficiary, but subject to the appropriate trust conditions. This is especially important in instances of divorce and/or blended families.
Life insurance can provide for your child (as the named beneficiary or the beneficiary of an insurance trust) no matter when you pass away.
Protect and support your special needs child today and tomorrow, as well as your overall financial life, by consulting with your professional advisor now.
This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances.
For more information on this topic please contact Uxbridge Investors Group Consultant Dave Boulton at 905-862-0227.