A SPECIAL NEEDS QUIZ

While will and estate planning advice is relevant to all families, there are additional considerations when you have a relative with a disability or special needs.

Parents must be concerned about financial security and personal safety not just for their lifetimes but for the lifetime of their son or daughter with a disability.

Check your special needs planning quotient with this quiz prepared by the Planned Lifetime Advocacy Network.

Answers to special needs quiz provided by the 

Planned Lifetime Advocacy Network:

1. The best way to leave a share of my estate for my child with a disability is to leave their share with my other children.

Laws in B.C. require that you provide adequately for your spouse and each of your children in your will. If they have not been provided for adequately, they, or the public guardian and trustee on behalf of your family member with a disability, can go to court to change your will. Leaving their share with another family member, or expecting that government will provide care for them, will likely be seen as not providing for them adequately.

2. A discretionary trust disqualifies my adult relative with a disability from receiving government benefits.

In fact, creating a discretionary trust in your child's name enables them to maintain their eligibility for government benefits. A discretionary trust is not counted as an asset of the person because they do not control how the money is spent.

The B.C. government also permits a wide variety of disbursements from the trust to your relative without affecting their benefits. There is no limit to the size of the discretionary trust you can establish for your relative.

3. I can only apply for the federal disability tax credit when my child with a disability turns 19.

You can apply for the federal disability tax credit as soon as you realize your child has a disability. The tax credit is available to the parents if you continue to support your child regardless of their age and even if they do not live with you. If you have not applied for the tax credit but are eligible you can receive credit for the years you did not claim it.

4. Even if I die without a will, my young children will be taken care of by the people I trust.

If you die without a will and there is no surviving parent who has legal custody, the superintendent of family and children's services will become the guardian of your minor children. For another relative or family friend to become their guardian, they will have to apply to the B.C. Supreme Court. To prevent a costly, complicated and potentially heartbreaking outcome, you must make a will.

5. I can use life insurance to finance a trust for my child with a disability.

A life insurance policy on your life can be designated as a discretionary trust on behalf of your child with a disability. Plus, you avoid probate fees. Families with young children with limited disposable income find this an economical means to finance a trust for their relative.

6. I can name a guardian for my adult child with a disability in my will and give the guardian the legal status they need to make decisions on the child's behalf.

Once your child becomes an adult, that is of legal age, you are no longer their legal guardian. You can designate guardians to act as substitute parents for your minor children. You cannot appoint a guardian in your will regardless of their disability. Guardians can only be appointed by the courts in a legal and costly process which strips your relative of their legal status and can only be done before your death.

A less intrusive alternative is to encourage your child to develop a representation agreement which identifies people to assist them in making decisions. If your child creates a representation agreement, they could name you as a representative, giving you legal status to assist them with decision making.

7. I can transfer money in my RRSP or RRIF into a trust for my child with a disability without paying any tax.

The good news is that federal legislation permits the transfer of RRSPs and RRIFs to a dependent child with a disability without paying tax in some circumstances. However, these circumstances are quite restrictive. The bad news is that even if your child was to receive the funds, they might be treated as an asset, thereby disqualifying them from government benefits. PLAN is engaged in active discussions with both the federal and provincial governments to improve the situation.

8. I can name one of my other children as trustee of the funds I leave for my child with a disability.

You may name one or more of your other children as trustee of the discretionary trust you establish for your child with a disability. However, there may be a perception of a conflict of interest, since they or their survivors may stand to inherit the remainder of the estate. This perception of conflict may invite scrutiny from the public guardian and trustee.

Accordingly, PLAN recommends a co-trustee arrangement. One trustee is someone who has a caring, personal relationship with your relative with a disability and at least one other trustee is a neutral third party (such as a trusted friend or trust company) who does not stand to benefit from your estate.

9. Once my child with a disability dies, any money left in the trust goes to the government.

The funds left in any trust you set up will not go to government. When you establish a discretionary trust for your child with a disability your lawyer will ask you to identify beneficiaries for the remainder of the trust. Since most families establish a beneficiary trust exclusively for the benefit of their relative, PLAN recommends inserting a clause in your will advising your trustees to spend as much of the capital and interest to the benefit of the person with a disability during their lifetime.

10. A trust can own a home on behalf of my child with a disability.

The next best thing to having a place of your own is having a trust which owns your place. This is an approach more and more families are taking to guarantee long-term housing.

To prevent exploitation they purchase a home for their child and place it in a trust. Since the trust is in their child's name they will receive any home ownership grants and enjoy all the other benefits of being a home owner.

A home lived in by the individual, whether owned directly or in a trust, does not disqualify the individual from government benefits.

11. A child with a disability receiving an inheritance is automatically disqualified from receiving government benefits.

If people on government benefits receive an inheritance, life insurance proceeds, ICBC or other financial payout, up to $100,000 of that amount can be placed in a trust.

Because the trust is not considered an asset, the person's disability benefits are not affected. The minister responsible for BC Benefits has the discretion to exempt an amount higher than $100,000 in certain circumstances.