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The grandparents of a special needs child contacted me recently wanting to do something “different” to provide for their grandson and his parents.

The boy was born with a severe disability requiring special care - an emotional and financial challenge for any family.

We reviewed practical tax and estate planning strategies to ensure that sufficient funds would always be available and the child would be well cared for if his parents die prematurely.

With the blessing of the grandparents’ accountants, we arranged life insurance on both parents to provide a monthly income for the rest of the child’s life.

Financial planning for a disabled family member is an important topic recently examined in my article published in The TaxLetter®. “ Know your options”. Read it HERE.

Here’s a summary of planning issues to consider if your child or a family member has special needs.

A Will: More than half of Canadian adults don’t have one.   Read this and this.

A will is particularly important when dealing with the needs of a disabled child and issues of guardianship.

Powers of attorney:  You need two: one for your property and one for your health.  Read this . Who will look after your special needs child if you become incapacitated?

Henson Trust: Widely considered the most tax-efficient way to protect a disabled person from government claw backs based on reported income.

Trustees:  Who will be responsible for overseeing assets left for your child?

That person must be aware of the child’s needs and know how the different benefits work.

Estate Directory: Does somebody know where everything is located?  Get organized now with this free Estate Planning Toolkit.

Registered Disability Savings Plans (RDSPs): Contribute up to $200,000 (lifetime limit) to a disabled person’s RDSP and get a matching contribution from the federal government that grows tax-free like an RRSP.

Canada Disability Savings Grant (CDSG): With a lifetime limit of $70,000, the federal government contributes matching grants ranging from 100% to 300% to a maximum of $3,500 a year.

RRSP/RRIF Beneficiaries:  Parents and grandparents can now roll over their RRSPs and RRIFs at death to the RDSPs of financially dependent children and grandchildren on a tax-deferred basis and avoid a hefty tax bill.

Disability Tax Credit (DTC): Most Canadians don’t claim it because they don’t know about it. It’s a non-refundable tax credit available for people with a severe and prolonged impairment.

Companies like National Benefit Authority specialize in helping people recover up to $40,000 from Canada Revenue Agency.

Life insurance: Especially important when there is a child with special needs. Life insurance will ensure there is income replacement when the parents die to cover the costs of ongoing care.  The special needs child cannot be the beneficiary so a trust is often set up and looked after by a trustee. Alternatively, an annuity can be created to provide a monthly payout during the child’s lifetime.

Disability, critical illness and long term care insurance:  Providing proper care for a disabled child is challenging in many ways. There is nothing worse than having to overcome financial challenges while caring for the needs of a disabled family member.

Health spending account (HSA):  Your HSA can allow you to deduct expenses instead of paying for services with after-tax dollars.

Many programs are now available to help save for a disabled child’s future. Work with a financial planner experienced in disability benefits. Read this post

Please be in touch to get a no-obligation review of your own situation.

Contact me now to get started. Call me toll-free at 1-866-566-2001 or send an email to info@illnessPROTECTION.com

I look forward to helping you and your family.

Stay healthy