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Enhancing Quality of Life for a Person with a for a Person with a Disability on ODSP Disability on ODSP Disability Benefits Disability Benefits Sallie Hunt Northwest Community Legal Clinic 1-800-403-4757

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Enhancing Quality of Life. for a Person with a Disability on ODSP Disability Benefits Sallie Hunt Northwest Community Legal Clinic 1-800-403-4757. Locating ODSP Policy Directives. To find ODSP Policy Directives – Go To: - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: Enhancing Quality of Life

Enhancing Quality of

Life for a Person with a Disability on for a Person with a Disability on

ODSP Disability BenefitsODSP Disability Benefits

Sallie HuntNorthwest Community Legal Clinic

1-800-403-4757

Page 2: Enhancing Quality of Life

Locating ODSP Policy DirectivesTo find ODSP Policy Directives – Go To:Ministry of Community and Social Services at

http://www.mcss.gov.on.ca/mcss/english/index.htm

o Click on Ontario Disability Support Programo Find Please Note – Click on ODSP policy

directives o Click on Income Support Directives

http://www.mcss.gov.on.ca/mcss/english/pillars/ social/directives/ODSP_incomesupport.htm

Page 3: Enhancing Quality of Life

TOPICS: Investments & Estate Planningo Exempt Assets & Investments for people

receiving ODSP benefitso RESPs & RDSPs

o Trustso Leaving gifts in your Will through a Trusto Henson Trust – a special type of Trust

Page 4: Enhancing Quality of Life

Exempt Income/Assets on ODSPo $5,000 for a single person

Income was increased to $6,000 from gifts, voluntary payments, payments from trusts or life insurance policy, honorariums or windfalls

o Owning a home or Principal Residenceo Vehicle

o 2nd vehicle if required for work

o CCTB, NCBS, OCB, etc.

Page 5: Enhancing Quality of Life

Exempt Assets on ODSP

o Payments from any source for disability-related items

o Pre-paid funeral o Earnings & Assets of dependent childreno Earnings & Assets of a dependent adult

while attending schoolo Locked-in RRSPs and locked-in pensions

Page 6: Enhancing Quality of Life

Exempt Assets on ODSP

o Trust fund from insurance proceeds or inheritance*

o Life insurance policy*o Pain & suffering awards/settlements*o WSIB non-economic loss (NEL) awards*

*To a Maximum of $100,000

Page 7: Enhancing Quality of Life

Investments Allowed on ODSP

RESPs* Registered Education Savings Plans

*Lifetime Limit of $50,000o CESGs + CSBs

RDSPs**Registered Disability Savings Plans

**No Maximum Limit

Page 8: Enhancing Quality of Life

RESPs – What is an RESP?

RESP – Fed Gov’t incentive program for parents and family to save for a child's post-secondary education

RESPS include: 1. Canada Education Savings Grant (CESG)

o CESG* pays 20% (or more) of annual contributions made to an RESP – to a maximum of $500/child

($1,000/child if unused from previous year) * Lifetime Limit of $7,200If funds are taken out of an RESP prematurely must repay

the Gov’t of Cda for the CESG (unless child/beneficiary is already attending a post-secondary institution)

Page 9: Enhancing Quality of Life

RESPs – include: 2. CLB – Canada Learning Bond CLB pays $500 first year and $100 per year* until

child is 15 o If child qualifies – born after Dec. 31, 2003, & receives

the National Child Benefit Supplement (NCBS)

*To a Maximum of $2,000

o The first deposit of the CLB includes an extra $25 to cover the cost of opening an RESP

o You do not have to contribute money to receive CLB payments – JUST OPEN an RESP

Page 10: Enhancing Quality of Life

RESPs – To Open an RESP

o It costs $1.00 to open an RESP account for a child with a RESP provider (most financial institutions)

o You will need a Social Insurance Number (SIN) for you and your child

o If you do not have a SIN – Apply at your local Service Canada office or go online to www.servicedanada.gc.ca

Page 11: Enhancing Quality of Life

RESPs – To Open an RESP

o You do not need a bank account to open an RESP

o There are several types of RESPs – Family Plan, Individual Plan or Group Plans

o There is no age limit for opening an RESPo An RESP can stay open for a maximum of

26 years (31 years for a person with a disability)

Page 12: Enhancing Quality of Life

RESPs – Contributions

o You will not be taxed on the amount you contribute to your RESP

o Interest paid on any money borrowed to contribute to an RESP cannot be deducted

o You do have to pay taxes on the money you earn in the RESP plan as interest

For more info on RESPs go to: http://www.cra-arc.gc.ca/E/pub/tg/ rc4092/rc4092-e.html#P52_7449

Page 13: Enhancing Quality of Life

RESPs – Registered Education Savings Plans for those on ODSPo Any member of the family benefit unit can

have an RESP Exempt Asseto Any money or gifts paid into an RESP

Exempt Asseto Fed Gov’t matching payments - CESG or

CSB into RESP Exempt Asseto Beneficiary of RESP can be changed from

one child to another

Page 14: Enhancing Quality of Life

RESPs – Registered Education Savings Plans for those on ODSP o RESP funds used for Education Costs Exempt

can be used for part- or full-time study

o Some of the RESP funds can be used as an Educational Assistance Payment* to fund a Qualified Educational Program

*To a Maximum of $5,000

Educations Costs: Tuition & other fees, books, instructional supplies & equipment, transportation, and disability-related expenses

Page 15: Enhancing Quality of Life

RESPs –Child does not continue Education after high school If your child does not continue education after

high school :

(1) Wait as your child may decide to study later

(2) Transfer the money to a sibling’s RESP

(3) Transfer money to an RRSP or

(4) Consult with your RESP provider about withdrawing your savings

Page 16: Enhancing Quality of Life

RDSPs – What are Registered Disability Savings Plans?RDSP is a savings plan for parents and others

to save for a person who is disabled and eligible for the Disability Tax Credit

o Contributions to an RDSP are not tax deductible

o Contributions can be made until the disabled/beneficiary turns 59 years of age

For more info go to: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rdsp-reei/

Page 17: Enhancing Quality of Life

RDSPs – To Set Up an RDSPFirst - Qualify for federal Disability Tax Credit

(DTC)o Complete Form T2201, Disability Tax Credit

Certificate - http://www.cra-arc.gc.ca/E/pbg/tf/t2201/

o Take the form to a qualified health professional o Once completed send it to the Winnipeg Tax

Centre o This can be sent at any time during the year

Page 18: Enhancing Quality of Life

RDSPs – Contributions

Contributionso No annual limito Contributions are limited to a lifetime

amount of $200,000

RDSPs include contributions from:1. Canada Disability Savings Grants (CDSG) 2. Canada Disability Savings Bonds (CDSB)

Page 19: Enhancing Quality of Life

CDSG + CDSB Contributions

1. Canada Disability Savings Grants (CDSG)* o Fed Gov’t will match annual contributions to a maximum

of $3,500/year and to a lifetime CDSG limit of $70,000

2. Canada Disability Savings Bonds (CDSB)* o Bonds up to $1,000/year provided for low- & modest-

income families, to a lifetime limit of $20,000o No requirement to contribute to RDSP to access CDSBs

*Can be paid until the Beneficiary turns 49

Page 20: Enhancing Quality of Life

RDSPs -Withdrawal of Funds

Contributions made to an RDSP are not included as income for the beneficiary when withdrawn

But, the Grant (CDSG), Bond (CDSB) and any investment income earned will be included in the beneficiary’s income for tax purposes when the money is withdrawn

Page 21: Enhancing Quality of Life

RDSPs – Registered Disability Savings Plans for those on ODSPo All funds in RDSPs Exempt Asset

o no matter who makes payments to RDSP

o Canada Disability Savings Grants (CDSG) & Bonds (CDSB) Exempt Asset

o Income (interest) earned & reinvested in RDSPs Exempt Asset

o All withdrawals from RDSPs Exempt Asset/Income for ODSP (but not for income tax)

Page 22: Enhancing Quality of Life

Trusts – What is a Trust?A Trust is a bank account in which a person (the

Trustee) holds the account for the benefit of another person (the Beneficiary)

Sometimes the Trustee and Beneficiary are the same person

o The Trustee must use the money in the Trust for the benefit of the Beneficiary

o Certain Trusts fit under ODSP Asset and Income Exemptions

o Money from a Trust* created from proceeds of a life insurance policy Exempt Asset

*To a Maximum of $100,000

Page 23: Enhancing Quality of Life

Trusts – from an Inheritanceo Money from a Trust* (Testamentary Trust)

created through a Will Exempt Asset

o Inheritance money received by a Beneficiary directly and afterwards put into a Trust* (Shelter Trust)

= Income in the month received and then is Exempt as an Asset

*To a Maximum of $100,000

Page 24: Enhancing Quality of Life

Trusts – Henson Trust

An Inheritance of more than $100,000 is NOT an Exempt Asset because it is over the ODSP maximum limit

o This means a person on ODSP would be found ineligible for ODSP benefits

UNLESSo A Henson Trust had been set up, ando The Henson Trust MUST have been

established in the Will

Page 25: Enhancing Quality of Life

Trusts – Henson Trust

A Henson Trust is also called a “Discretionary Trust” o because the beneficiary has

NO control, nor access to the Trust NO say over when money is removed from

the Trust nor how much

o Payments and control of the Trust are at the Absolute Discretion of the Trustee

Page 26: Enhancing Quality of Life

Trusts – Henson Trust

A Henson Trust established through a Will passes wealth on without jeopardizing a person’s eligibility or entitlement to ODSP benefits because of is discretionary nature

o The Trustee administering the Trust must be aware of relevant ODSP legislation and policy directives

o If the Trust allows, the Trustee can spend both the capital and income

Page 27: Enhancing Quality of Life

Trusts – Henson Trust

o A Henson Trust MUST be drafted properly to be absolutely discretionary

o The Trust should state what happens to the Trust should the beneficiary die

o For this reason, the Trustee should not be a family member who could then inherit the Trust

Page 28: Enhancing Quality of Life

Henson Trust – Things to Think AboutThe Trustee has a lot of power so consider:o Appointing more than one Trusteeo How well the person knows the Beneficiaryo Ability to manage Trusto Ability to understand terms of Will & Trusto Ability to understand ODSP Ruleso Trustworthiness of the person

The End