RDSPs and Lack of Guardianship (2.5 min)

In this video, Kenneth Pope explains the importance of the Registered Disability Savings Plan and steps to take when acquiring it. To qualify for the RDSP, you must be eligible for the Disability Tax Credit. If there is a lack of guardianship, seeking legal guardianship is strongly suggested. This allows someone to manage the account for the child when the parents pass on.

Video Transcript:

If a person qualifies for the disability tax credit, they then also qualify to have a registered disability savings plan. If they were 18 and the plan was set up, then every year the federal government would contribute $1,000 bond for 20 years and if the family contributed $1,500 a year, the government would add a further $3,500 for 20 years. So at the end of the 20 years, the child is 38 and the family's put in 30 thousand the government has put in $90,000 - now if this money was invested at 5% which is reasonable. The total would have accumulated to approximately $200,000 and it would then grow at the rate of a $100,000 every decade. So by the time the child is 58 it's $400,000. Now under the present rules only the parents of an incapable child can be the account holders - there must be an account holder to manage the account. So if the parents pass on there's no one at that point who is the legal representative for the child to manage this money and it's substantial.

So at that point if the child is not competent there must be someone who is their legal guardian - so what the parents should consider the seeking legal guardianship together with someone who will become the successor guardians such as other children, siblings, so that when the parents pass on there is someone to manage the money - keep it invested properly. Otherwise what will happen in practice is there's no legal representative and the institution that holds the RDSP - when the child turns 60 will simply commence issuing checks payable to the child and sent to their last known address, which obviously is very untidy.

We'd be happy to discuss this somewhat complex matter further. Please feel free to give us a call.

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