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Financial Planning for a Child With a Disability

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Financial Planning for a Child With a Disability

If you are raising a child with a disability, you may carry a question that feels bigger than most: what happens to my child when I am no longer here to help?

It is a deeply human question, and it comes from love. The good news is that you do not have to solve everything at once. Canadian families have a few important planning tools that can work together like building blocks. You can put them in place one at a time, at your own pace. Here is a simple roadmap to help you see the bigger picture.

Start With the Disability Tax Credit

For many families, the first building block is the Disability Tax Credit, often called the DTC.

The DTC is a federal tax credit for people with a severe and prolonged impairment. In plain language, it can help reduce the amount of tax a family owes. Just as importantly, it often serves as a gateway to other programs and planning opportunities, including the Registered Disability Savings Plan.

To apply, a qualified medical practitioner must certify your child’s condition on the required form and submit it to the Canada Revenue Agency. If your child does not have the DTC on file yet, this is often the best place to begin, because so much of the rest of the plan may depend on it.

Build Long-Term Support With the RDSP

Once your child qualifies for the DTC, you may be able to open a Registered Disability Savings Plan, or RDSP.

Think of the RDSP as a special savings account built for one purpose: helping support your child in the future. What makes it especially helpful is that the government may also contribute to the plan through grants and, in some cases, bonds. For families with lower income, those government additions can make a meaningful difference over time.

The exact amounts and rules can change, so it is always best to check the current details. But the big idea is simple: the RDSP is designed to grow quietly in the background and become a source of support later in life.

Protect Provincial Benefits

Here is where many families need to slow down and plan carefully.

Many adults with a disability receive monthly income support or disability assistance from their province. These programs often have limits on how much income or how many assets a person can have. If your child were to receive a large amount of money directly, such as an inheritance, it could push them over those limits and affect the benefits they rely on.

This is one reason families often look at a discretionary trust, sometimes called a Henson trust. In this kind of trust, the money is held and managed by a trustee rather than owned directly by your child. Because your child does not legally control the assets, the funds may not count against them for means-tested provincial benefits, depending on the province and how the trust is set up.

In simple terms, a trust can help you leave money to your child without accidentally taking away support they already depend on.

Make Sure Your Own Plan Can Carry the Load

So far, we have focused on your child. Now it is time to talk about you, because your plan only works if it can keep going when life changes.

This is where your own insurance becomes important. Life insurance can provide a lump sum after a parent dies. Disability insurance can replace part of your income if you become unable to work. Together, these tools can help make sure there is money available to support your child’s care plan no matter what happens to you.

There is also an important detail to think about when naming beneficiaries. It can feel natural to name your child directly, but for a child with a disability, that may create the same benefit issues mentioned above. Many families instead direct those funds to the trust, so the money is managed in a way that supports the child while helping protect other benefits.

Pull Everything Together With a Will

The final building block is a will, and it is the piece that helps hold everything else together.

Your will is where you can create the trust, direct assets and insurance proceeds, and name the people who will step into key roles after you are gone. You can name a guardian, who would care for your child if they are still a minor. You can also name a trustee, who will be responsible for managing the trust money carefully over time. Choosing the right people for these jobs is one of the most thoughtful decisions you can make.

When your will lines up with your RDSP, trust, and insurance planning, all the pieces work together much more smoothly. That is the goal: not perfection, but a plan that is clear, durable, and supportive.

Take One Step at a Time

You do not need to finish this roadmap today. In fact, for many families, the best first step is simply checking whether the DTC is already in place.

From there, you can begin building the rest of the plan with more confidence and less pressure. Each piece you put in place is one more layer of security for your child, and one more layer of peace of mind for you.

This article is for general information only and is not intended to provide legal, tax, or investment advice. Families should speak with qualified professionals before making decisions about disability planning.

Sources:

Disability Tax Credit
Registered Disability Savings Plan

The Henson Trust: Providing Financial Security for Those with Special Needs

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When considering the arrangements for managing an individual’s finances and assets after their passing, it is vital to be aware of the existence of the Henson Trust. This type of trust helps ensures that people with disabilities or special needs can still have money to take care of them without losing their government benefits. It’s named after a court case in Canada and can help families take care of their loved ones in a smart way.

 

How the Henson Trust Started: A Big Court Case

The case revolved around Marguerite Henson and her daughter Audrey. Audrey faced challenges due to a disability, requiring additional assistance. Marguerite’s concern was ensuring that Audrey’s financial well-being was secure even after Marguerite’s passing. However, Marguerite didn’t want Audrey’s ability to receive government assistance to be compromised.

In its ruling, the court determined that the funds held in a special trust for Audrey shouldn’t be considered as her personal assets. This crucial decision allowed Audrey to maintain her eligibility for government support despite having funds saved. This ruling set a precedent that provided guidance for other families in similar situations, enabling them to also ensure the welfare of their loved ones without jeopardizing their access to government assistance.

 

What the Henson Trust Does and How It Helps

A Henson Trust presents a distinct method of setting aside funds for an individual who requires additional assistance due to a disability. Unlike conventional savings approaches, the beneficiary of the funds does not retain control over them. Instead, a designated trustee assumes the responsibility of determining the timing and way the funds are utilized to benefit the individual. This approach is intended to prevent the funds from being considered the individual’s personal assets, thus enabling them to maintain eligibility for government assistance.

Several advantageous aspects of a Henson Trust encompass:

  1. Keeping Government Benefits: The best thing about this trust is that it lets people get government help even if they have some money saved up. This way, they can have a better life without losing important benefits.
  2. Extra Support: The trust gives extra funds to the person who needs it. This can be used for things like medical bills, a place to live, education, and fun activities that make life better.
  3. Someone You Trust Takes Care: A trustee is chosen to look after the money in the trust. They make sure the money is used in the best way for the person who needs help.
  4. Different Ways to Save: Families can put money into the trust from things like insurance, investments, property, or other valuable things.

 

Things to Think About When Using a Henson Trust

Using a Henson Trust needs careful thinking and planning. Here are some important things to know:

  1. Choosing the Right Trustee: The trustee is a big part of the trust. They’re the ones who take care of the money and decide how to spend it. It’s important to choose someone who knows what the person with special needs really needs and can make good choices.
  2. Making Clear Plans: Establishing Clear Strategies: The documentation that forms the basis of the trust must exhibit utmost clarity. This ensures that all parties involved are well-informed about the intended course of action concerning the funds, thus eliminating any potential confusion.
  3. Regular Evaluation and Revisions: Given that circumstances can evolve, it’s prudent to periodically review the trust to ensure it remains suitable for the individual requiring assistance.
  4. Seeking Expert Advice: Engaging in discussions with a specialized attorney or financial advisor can be tremendously advantageous. Their expertise in matters related to these types of trusts can provide invaluable guidance to families, aiding them in making well-informed decisions.

 

The Henson Trust offers families a unique way to ensure that their family members with disabilities or distinct needs possess the financial resources necessary for a quality life. This trust plays a crucial role in maintaining government support while also offering supplementary funds for essential expenditures. It’s important for families to engage in meticulous planning, select an appropriate trustee, and seek guidance from experts to establish a future that is both secure and fulfilling for their special loved ones.

What is disability insurance?

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If you cannot work because you are seriously injured or ill, disability insurance will provide you with a monthly, tax-free income to help replace your lost wages.  An injury does not have to be as blatant as a broken leg or arm – suffering from chronic pain or dealing with mental health issues can also qualify you for a disability insurance payout.  

Why do I need disability insurance?

Unfortunately, people become disabled – whether temporarily or permanently – quite often. In 2017, over 20 percent of Canadians had one or more disabilities. 

If you’re disabled, you may lose one of your most valuable assets – your ability to work and bring in a paycheck. Disability insurance can help replace that paycheck for as long as you need it to. Being able to rely on a disability insurance payout means you won’t have to dip into your savings if anything happens to you.

Disability insurance is especially important if you are self-employed, particularly if you are the family’s sole income earner.

What if I already have disability insurance through work?

If you have disability insurance through work, that’s great – but it may not replace 100 percent of your paycheck, especially if you’re off work for a long time. If you purchase private disability insurance, you can:

  • Choose how much coverage you want.
  • Adjust your coverage as needed.
  • Not have to worry if you leave your employer – you won’t lose your disability insurance coverage.

Having private disability insurance will give you peace of mind that you either have additional coverage if you are employed and at least some disability coverage if you lose your job.

How does disability insurance work?

We’d be happy to answer any questions you have about disability insurance. There are five main steps to disability insurance:

  1. Determine the amount of coverage you want. The higher your salary, the more coverage you should get.
  2. Pay your monthly premiums. Factors like your health, your age, and the amount of coverage you have will all impact the cost of your premiums.
  3. File a claim if you become disabled – we can help you with this.
  4. Receive your monthly payments once your waiting period has passed – a longer waiting period can lower your premiums, but it does mean you’ll go longer without any income.
  5. When you are healthy enough to return to work, or your coverage period runs out, you will stop receiving disability insurance payments.

We’re Here To Help

If you’d like to know more about disability insurance – from how much it would cost you to what you can file a claim for – we’re here to help! Give us a call today.

Empowering Your Family’s Financial Future: A Comprehensive Guide to Budgeting

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Taking charge of your family’s financial well-being through effective budgeting is a crucial step in securing a brighter future. We’ll explore the significance of budgeting and provide practical tips to help you manage your money wisely while ensuring the best possible support for your loved ones, including those with disabilities and their Registered Disability Savings Plan (RDSP).

Why Budgeting Matters for Families

Budgeting is a powerful financial tool that holds importance for all families:

  1. Financial Clarity: It offers a clear overview of your family’s income and expenses, helping you make informed decisions about allocating funds.
  2. Goal Achievement: Budgeting helps you allocate funds not only for your loved one’s RDSP but also for other family financial goals, such as saving for education or a home.
  3. Expense Control: It identifies areas where you can cut back on expenses, freeing up money for your family’s financial priorities.
  4. Debt Reduction: By tracking spending, you can allocate extra funds to pay down debt faster, ensuring your family’s financial stability.
  5. Emergency Preparedness: A budget provides a financial safety net for unexpected expenses, which can be especially critical for families with additional financial responsibilities.

Steps to Effective Budgeting for Families

  1. Calculate Income: Determine your total monthly income, including salaries, government benefits, and any disability-related support for your loved one.
  2. List Expenses: Categorize expenses into fixed (e.g., housing, utilities) and variable (e.g., groceries, entertainment).
  3. Set Financial Goals: Define short-term and long-term financial goals for your family, ensuring that your loved one’s RDSP contributions are part of the plan.
  4. Create a Budget: Use budgeting tools or apps to allocate income to expenses, savings, and financial goals without exceeding your income.
  5. Monitor and Adjust: Regularly track spending against your budget, making necessary adjustments to ensure your family’s financial health.

Tips for Successful Budgeting

  1. Be Realistic: Set achievable goals and create a budget that accommodates your family’s unique needs, including the financial responsibilities associated with the RDSP.
  2. Prioritize Savings: Ensure that contributing to your loved one’s RDSP is a top financial priority, but don’t forget to save for other family goals too.
  3. Emergency Fund: Maintain an emergency fund to cover unexpected expenses, which can benefit all family members.
  4. Review and Cut Expenses: Periodically review expenses to find areas where you can save and allocate more funds to your family’s financial priorities.
  5. Pay Yourself First: Treat savings, including RDSP contributions, as non-negotiable expenses, just like other essential bills.
  6. Seek Professional Advice: Consult a financial advisor who specializes in disability-related financial planning for tailored guidance.

Budgeting is your family’s pathway to financial security and ensuring a brighter financial future. By budgeting wisely and prioritizing your loved one’s financial well-being, you can control your family’s finances, reduce stress, and work towards a future filled with financial peace of mind. Remember, financial success for families means making informed choices that align with your values and aspirations. Start budgeting today to achieve financial wellness for your entire family, balancing the needs of all family members, including those who rely on the support of the RDSP.

Protecting Key Talent using Group Benefits

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Building a Sustainable Future Together

As a group benefits specialist, our main objective is to foster a sustainable future by working in partnership with our clients. We believe that a knowledgeable and engaged workforce is essential for any organization’s success. One of the crucial aspects of achieving this goal is protecting key talent within your company. In this article, we will explore how group benefits can play a significant role in safeguarding your organization’s most valuable asset: its people.

The Value of Key Talent

Key talent refers to those employees who possess critical skills, expertise, and knowledge that drive your company’s growth and success. They are the backbone of your organization, ensuring it thrives in today’s competitive landscape. Retaining these valuable individuals is vital as their loss can have a significant impact on your business operations, productivity, and overall morale.

Challenges in Retaining Key Talent

In today’s dynamic job market, retaining key talent can be challenging. Many factors come into play, such as attractive offers from competitors, personal growth opportunities, work-life balance, and employee well-being. As an employer, understanding and addressing these challenges are essential to protect your top performers and maintain a competitive edge.

The Role of Group Benefits

Group benefits can be a powerful tool in attracting and retaining key talent. By offering comprehensive and customized benefits packages, you demonstrate your commitment to your employees’ well-being, security, and future. Here are some key aspects of group benefits that contribute to protecting your key talent:

1. Health and Wellness Coverage

Providing robust health and wellness benefits, including medical, dental, and vision coverage, not only promotes a healthy workforce but also demonstrates your dedication to their overall well-being. When employees feel supported in their health, they are more likely to remain loyal to your organization.

2. Income Protection

Group benefits often include disability insurance, which provides financial protection for employees who might experience an injury or illness that prevents them from working. This security helps ease financial worries during challenging times and creates a sense of stability, encouraging key talent to stay with your company for the long term.

3. Retirement Planning

A well-designed retirement plan is an attractive feature for key talent. It shows that you care about their future and are committed to helping them achieve financial security during their retirement years. Contributing to a retirement plan also reinforces a collaborative and client-focused relationship with your employees.

4. Work-Life Balance Support

Offering benefits that support work-life balance, such as flexible work arrangements, paid time off, and family leave, shows your understanding of the importance of a balanced life. Employees who feel they have the flexibility to manage their personal and professional responsibilities are more likely to stay committed to your organization.

5. Career Development

Group benefits can extend beyond traditional offerings. Consider including professional development and training opportunities within your benefits package. Investing in your employees’ growth not only enhances their skills but also reinforces your commitment to their long-term success.

Educational Approach and Collaboration

Our mission as group benefits specialists is to provide educational and collaborative support to our clients. By engaging in open discussions about your organization’s needs and goals, we can tailor group benefits packages that align with your unique requirements. Together, we can build a sustainable future by nurturing and protecting your key talent.

Protecting key talent using group benefits is not just a sound business strategy; it reflects a client-focused, educational, and collaborative approach to employee welfare. As a group benefits specialist, we are committed to working hand-in-hand with our clients to create comprehensive and customized solutions that safeguard their organization’s most valuable asset – their people. By investing in the well-being, security, and future of your employees, you are not only enhancing loyalty and retention but also building a stronger and more sustainable future for your company. Let’s continue to partner together to ensure a prosperous and thriving workforce.

Tax Tips You Need To Know Before Filing Your 2022 Taxes

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Tax Tips You Need To Know Before Filing Your 2022 Taxes

This year’s tax deadline is May 1, 2023, as April 30 falls on a Sunday this year. It’s important to make sure you’re claiming all the credits and deductions you’re eligible for. In this article, we’ll provide you with tips to help you maximize your tax refund and ensure you’re taking advantage of all the available tax benefits.

Canada Workers Benefit

The Canada Workers Benefit (CWB) is a refundable tax credit designed to help low-income working families and individuals. The credit is made up of two parts:

  • The basic amount

  • A disability supplement (if you qualify).

To determine whether you qualify for the tax credit, you’ll need to consider your net income and where you live. The CRA website provides full details about the net income qualification amounts.

The maximum amounts you can qualify for are as follows:

  • The maximum basic amount is $1,428 for single individuals and $2,461 for families.

  • The maximum amount for the disability supplement is $737 for single individuals and $737 for families.

Claiming Home Office Expenses Due To COVID-19

You can still claim home office expenses if you’re not self-employed but worked from home due to the pandemic. You can:

  • Claim the temporary flat amount if you worked more than 50% of the time from home for at least four consecutive weeks in 2022. You can claim $2 for each day worked from home, up to a maximum of $500. No paperwork or forms are required!

  • Use the detailed method and claim the actual amounts. In this case, you’ll need supporting documentation, plus a completed and signed T2200S form from your employer. You can claim various applicable expenses, including home Internet access fees.

The Tax Deduction for Zero-Emissions Vehicles

A capital cost allowance (CCA) is a tax deduction that helps cover the cost of an asset’s depreciation over time. The CRA created two new capital cost allowances, which apply to zero-emission vehicles bought after March 18, 2019.

They are as follows:

  • Class 54. This class is for motor and passenger vehicles, excluding taxis or vehicles used for lease or rent. It has a CCA rate of 30%. For 2022, capital costs will be deductible up to $55,000, plus sales tax. This amount will be reassessed every year.

  • Class 55 is for leased and rented vehicles or taxis. The CCA rate is 40%.

Return Of Fuel Charge Proceeds To Farmers Tax Credit

You may be eligible for this tax credit if you are either self-employed or part of a farming partnership in Alberta, Manitoba, Ontario and Saskatchewan.

This tax credit aims to help farmers offset the high cost of the carbon tax.

Eligible Educator School Supply Tax Credit

You can claim up to $1,000 of eligible supplies and expenses if you qualify for the educator school supply tax credit.

The tax credit rate for the 2022 tax year is 25%, with a maximum credit of $250.

Need help?

Do you qualify for a credit or deduction? Call us – we’re here to save you money on your taxes!

Highlights of the 2020 Federal Fall Economic Statement | Additional $20,000 CEBA loan available now

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On November 30, Finance Minister Chrystia Freeland provided the government’s fall economic update. The fall economic update provided information on the government’s strategy both for dealing with the COVID-19 pandemic and its plan to help shape the recovery. We’ve summarized the highlights for you.

Corporate Tax Changes

Information on several subsidy programs was included in the update. These changes apply from December 20, 2020 to March 13, 2021.

  • The government has provided an increase in the Canada Emergency Wage Subsidy (CEWS) to a maximum of 75% of eligible wages.

  • If you are eligible for the Canada Emergency Rent Subsidy (eligibility is based on your revenue decline), you can claim up to 65% of qualified expenses.

  • The Lockdown Support Subsidy has also been extended – if you are eligible, you can receive a 25% subsidy on eligible expenses.

Also, there were two other significant corporate tax changes:

  • Starting January 1, 2022, the government plans to tax international corporations that provide digital services in Canada if no international consensus on appropriate taxation has been reached.

  • The tax deferral on eligible shares paid by a qualifying agricultural cooperative to its members has been extended to 2026.

Personal Tax Changes

The following personal tax changes were included in the update:

  • The update confirmed the government’s plan to impose a $200,000 limit (based on fair market value) on taxing employee stock options granted after June 2021 at a preferential rate. Canadian-controlled private corporations (CCPCs) are not subject to these rules.

  • If you started working from home due to COVID-19, you could claim up to $400 in expenses.

  • The Canada Child Benefit (CCB) has temporarily been increased to include four additional payments. Depending on your income, you could receive up to $1200.

  • Additional modifications were proposed to how the “assistance holdback” amount is calculated for Registered Disability Savings Plans (RDSP). The goal of these modifications is to help RDSP beneficiaries who become ineligible for the Disability Tax Credit after 50 years of age.

Indirect Tax Changes

GST/HST changes impacting digital platforms were included in the update. They will be applicable as of July 1, 2021:

  • Foreign-based companies that sell digital products or services in Canada must collect and remit GST or HST on their taxable sales. Also, foreign vendors or digital platform operators with goods for sale via Canadian fulfillment warehouses must collect and remit GST/HST.

  • Short-term rental accommodation booked via a digital platform must charge GST/HST on their booking. The GST/HST rate will be based on the province or territory where the short-term accommodation is located.

And some good news on a GST/HST removal! As of December 6, and until further notice, the government will not charge GST/HST on eligible face masks and face shields.

The Takeaway

A lot of changes came out of the fall update – and you may be feeling overwhelmed. But help is at hand!

Contact us to learn more about how these changes could impact your personal and business finances.

Canada Emergency Business Account (CEBA) $20,000 expansion available now

The Government of Canada website has been updated with the new CEBA requirements and deadlines:

  • As of December 4, 2020, CEBA loans for eligible businesses will increase from $40,000 to $60,000.

  • Applicants who have received the $40,000 CEBA loan may apply for the $20,000 expansion, which provides eligible businesses with an additional $20,000 in financing.

  • All applicants have until March 31, 2021, to apply for $60,000 CEBA loan or the $20,000 expansion.

Apply online at the financial institution your business banks with:

To get the full details:

CEBA Loan Details

Throne Speech: Recovery Plan Highlights

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On September 23rd, in a speech delivered by Governor General Julie Payette, Prime Minister Justin Trudeau outlined the Federal government’s priorities focused on four foundations:

  • Fighting the pandemic and saving lives;

  • Supporting people and businesses through the emergency “as long as it lasts, whatever it takes”; 

  • “Building back better” by creating jobs and strengthening the middle class;

  • Standing up for Canadian values, including progress on reconciliation, gender equality, and systemic racism.

Below, we highlight the support programs that help those Canadians who are struggling financially due to the pandemic.

Canada Emergency Wage Subsidy extended to next summer

The Canada Wage Subsidy (CEWS) will be extended to summer 2021. Under new program criteria, businesses with ANY revenue decline will be eligible. However, the amount of the subsidy will be based on the revenue drop rather than the original 75%.

See what the changes are at Canada.ca

Canada Recovery Benefit increased to $500/week

The day after the Throne Speech, in a bid for opposition support, the federal government announced it will increase the new Canada Recovery Benefit (CRB) to $500/week for up to 26 weeks.

In order to qualify for this program, Canadians must be looking for work and had stopped working or had their income reduced by 50 per cent or more due to COVID-19, but are still making some money on their own.

Canada Recovery Sickness Benefit

The Canada Recovery Sickness Benefit (CRSB) will provide $500/week for up to 2 weeks for workers who are unable to work because they are sick or must isolate due to COVID-19.

Canada Recovery Caregiving Benefit

The Canada Recovery Caregiver Benefit will provide $500/week for up to 26 weeks per household to eligible workers who cannot work because they must provide care to children or family members due to the closure of schools, day cares or care facilities.

Creating a new Canadian Disability Benefit

The government pledged to bring in a new Canadian Disability Benefit (CDB) that will be modelled after the guaranteed income supplement (GIS) for seniors.

The CRB, CRSB, CRCB and CDB are pending the passage of legislation in the House of Commons and Senate.

See Eligibility for CRB and more