A SPECIAL NEEDS QUIZ
(for Canadian provinces other than BC)
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. |
| A SPECIAL NEEDS QUIZ |
HERE ARE THE ANSWERS TO THE QUIZ
Answers to special needs quiz provided by the Planned Lifetime
Advocacy Network: |
|
1. Government funds all the programs and services my
son/daughter with a disability requires.
Therefore I do not need to leave anything in my estate for
them.
|
1.
False
Provincial laws 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.
If I set up a discretionary trust I will disqualify my adult
relative with a disability from receiving government benefits.
|
2.
False
In fact, creating a discretionary trust in your
son/daughter’s name is the best way to ensure they do receive
government benefits. A
discretionary trust is not counted as an asset of the person even
though it is in their name because they do not control how the money
is spent. In some provinces there are limits on the size of the trust
and/or the amount and type of payment a trust can make. |
|
3. The federal disability tax credit is only available when my
child with a disability turns 19.
|
3.
False
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 as a tax credit if
you continue to support your son/daughter 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.
I can use life insurance to finance a trust for my
son/daughter with a disability.
|
4.
True
A life insurance policy on your life can be
designated to a discretionary trust on behalf of your son/daughter
with a disability. Life
insurance proceeds pass outside the will plus they are not subject
to probate fees. Grandparents or families with younger children with limited
disposable income find this an economical means to finance a trust
for their relative. |
|
5. When my child with a mental handicap becomes an adult I
still remain their legal guardian.
|
5.
False
Once your son/daughter reaches the age of
majority, that is, of legal age, you are no longer their legal
guardian. You need specific legal authority to make decisions for a
child who is now an adult. Thanks
to new legislation in many provinces and territories adults with
disabilities may participate in their own financial, health care and
personal decisions, if necessary with the assistance of other adults
including their parents. Thus
the parent’s role in decision making may continue but in an
alternate manner than as legal guardian. |
|
6. I can transfer money in my RRSP or RRIF into a trust
for my son/daughter with a disability without paying any tax.
|
6.
Maybe!
The good news is that Federal legislation
permits the transfer of RRSP’s and RRIF’s to a dependent adult
with a disability without paying the tax in some circumstances.
However these circumstances are quite restrictive.
The bad news is that even in the unlikely event your
son/daughter 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 federal and
provincial governments to improve this situation. |
7. I cannot name one of my other children as
trustee of funds I leave for my son/daughter with a disability.
|
7.
False
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 the perception of conflict of interest,
since they or their survivors may stand to inherit the remainder of
the estate. In some
provinces this perception of conflict of interest may invite
scrutiny from the Public Guardian and Trustee. |
8. Once my son/daughter with a disability dies,
any money left in the trust goes to government.
|
8.
False
The
funds left in any trust you set up will not go to government.
When you establish a discretionary trust for your
son/daughter with a disability your lawyer will ask you to identify
beneficiaries of the reminder of the trust.
Since most families establish a discretionary trust
exclusively for the benefit of their relative, PLAN recommends
inserting a clause in your will advising your trustees to spend all
or most of the capital and interest for the benefit of the person
with a disability during their lifetime. |
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9. A trust can own a home on behalf of my son/daughter
with a disability.
|
9.
True
The next best thing to having a place of your
own is to have a trust which owns your place.
This is an approach more and more Canadian families are
taking to guarantee long term housing.
To prevent exploitation they purchase a home for their
son/daughter and place it in a trust.
Or they permit the trust they establish to pay out part of
the capital in the trust to buy the beneficiary a home. Since the
trust is in their son/daughter’s name they will enjoy all the
other benefits of being a homeowner.
For example in some provinces they may receive a
homeowner’s grant.
A
home lived in by the individual, whether owned directly or in a
trust, does not disqualify the individual from government benefits. |
10. Only a trust company can act as trustee.
|
10.
False
Anyone can be a trustee.
For smaller trusts a family member or friend can be an
excellent trustee. For
trusts with larger sums of money you may want to consider using a
trust company. PLAN recommends a co-trustee arrangement.
One trustee can be someone who has a caring, personal
relationship with your relative with a disability and the other
trustee can be a neutral third party (such as a trusted friend or
trust company) who does not stand to benefit from your estate. |
|
11. If I die without a will my son/daughter with a disability
will be taken care of by people I trust.
|
11.
False
If you die without a will your estate will be
divided according to a formula established by each provincial
government. Decisions
will be made by people who do not know your relative and there is no
guarantee the money will go where you want it to.
Since the money will not be in a discretionary trust, your
son/daughter with a disability may become ineligible for government
support. Further if
there is no surviving parent who has legal custody of your minor
children a government agency may become their guardian.
To prevent a costly, complicated and potentially
heart-breaking outcome, you must make a will. |