Kenneth Pope speaks about the advantages of having a registered disability savings plan, as well as rates and other important information to know when looking into an RDSP.
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If you have a child or a family member who qualifies for the disability tax credit well then they also qualify to have a registered disability savings plan.
This is a federal program that was implemented in 2008 and the short story is that if you contribute 1,500 a year for 20 years or up to 20 years then the federal government will contribute forty five hundred a year. And if that money is invested at, let's say five percent, then at the end of the 20 years it's approximately two hundred thousand in total; and then if it's left invested at the same rate until the child is sixty, which is the plan at that point, they can then start to draw up on it.
It's approximately five hundred thousand dollars so this is not a small thing and from an estate planning perspective it's extremely important. Now the RDSP is the property of the child and does not fall into the parent's Henson trust, and so then you get into the question of course of well, what happens if the child dies. If they’re competent to sign a will then they should have a will because the will, will decide where it goes, it's part of their estate. If they are not capable of having a will well then they would be intestate, meaning no will and then by succession law if they happen to predeceased their parents then the parents would receive the money back at that age.
Typically the grants and bonds would be returned to the government and if they make it to 60, which is entirely possible of course, then at that point all of the money, grants and bonds are vested in the child. And in that case if there's an intestacy and the parents are deceased then it would go firstly for example to their siblings by succession law, and then if not the siblings or if there are none then to some other extended family member. But it's certainly a matter that's worth considering given the dollars involved and if it's available you should discuss it and make a decision as soon as your opportunity arises