The Family Guide to Disability and Personal Finances
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DISABILITY ALERT DISABILITY TAX CREDIT TRANSFER Sometimes an individual who qualifies for the DTC cannot use it because of low income. In that case the DTC can be transferred to a supporting individual spouse, parent, grandparents, brother, sister, and certain other family members. The claiming person must be providing basic necessities of life such as food, shelter and clothing on a regular basis to the person qualifying for the DTC. The person to whom the credit ...is transferred should be able to validate the support by claiming the Canada Caregiver credit or other personal tax credits with respect to the individual. Since the caregiver credit can be claimed even for individuals not living with you, the DTC transfer is easy to claim. https://www.thefamilyguide.ca/

DISABILITY TAX CREDIT INTRODUCTION - PART 1 I have spent more time than I want to think about reading through the disability tax credit (DTC) provisions. They are far too complex for most taxpayers and even tax professionals so the DTC and the many tax benefits that go with it such as the Registered Disability Savings Plan, attendant care tax credit, Qualified Disability Trust go unused. The DTC is discussed in Chapters 6 and 7 of The Family Guide. Consequently , in this an...d my next nine posts, I am going try to clarify important aspects of the DTC under the following headings: 1 - INTRODUCTION 2 - DIAGNOSIS OR OUTCOMES - TAXPAYER WRONG ROAD 3 - MARKEDLY OR SIGNIFICANTLY RESTRICTED 4 - QUALIFYING PHYSICAL ACTIVITIES - THE EASIEST PART 5 - QUALIFYING COGNITIVE ACTIVITIES - HERE'S A PROBLEM AREA 6 - ADAPTIVE FUNCTIONING - WHAT IS IT? 7 - OTHER QUALIFYING SITUATIONS - A HIGH BAR 8 - FORM T2201 - INTERPRETATION AND CONFUSION 9 - DEFINITIONS - MADE TO FAIL YOU 10 - SUMMING UP THE DTC - DIABOLICAL AT BEST Many people who should benefit from the DTC are not. and that's the shame of it. I think you will find this discussion interesting. Give me your thoughts. as we move along For more information visit www.thefamilyguide.ca

DISABILITY ADVISORS SHOULD DO A BIT MORE HOMEWORK When it comes to disability, it’s my experience that financial and legal advisors sometimes jump to solutions without really defining the issues. So often I see a Henson Trust created when there are only one or two years between the expected death of a parent and the time when their child will no longer qualify for social assistance. Or an RSDP is set up when its not really needed because the individual with a disability has... very little need for money because of their high level of disability. So, advisors should step back and do some analysing, including a life plan, before they put forward solutions. The Family Guide will help advisors understand the complexity of disability and how it relates to financial and legal solutions.

What is a Henson Trust? A Henson trust is a discretionary trust similar to any discretionary trust, but its primary function is to maximize social assistance. The trustees have full discretion to control the trust assets and their distribution to beneficiaries. Henson trusts help families arrange their financial affairs over the long term, despite the difficulties brought about by disability. The trustees become a kind of property manager when personal ownership is not a goo...d choice or even a possibility. Henson trusts can also be useful to manage the personal finances of vulnerable individuals who do not qualify for social assistance but who cannot or should not own significant personal assets. If structured properly, a principal residence trust, an Inheritance trust and a Qualified Disability trust can all qualify as Henson trusts and combine their specific uses with the Henson trust use. You can visit our website at https://www.thefamilyguide.ca/

Tax Planning - Navigating the Tax System Tax planning is critically important and yet often neglected. Getting your taxes done each year, even by a qualified tax advisor, is just not enough. And yet, that’s exactly what most people do. At one time, income tax was mostly about collecting taxes to pay the country’s bills. It still isbut now there is more emphasis on social policy and fairness in taxation. Consequently, more provisions recognize special situations that reduce o...r delay taxes and make the system more equitableas where disability exists, for example. Not that long ago, there were more tax deductions than tax credits. Tax deductions disproportionally benefit taxpayers in higher tax brackets. To improve fairness, there has been a shift away from tax deductions and towards non-refundable tax credits in order to give the same tax advantage to everyone, regardless of income level. Beyond maximizing tax credits, there are other ways to reduce, delay or transfer income or tax credits to someone else in the family. These options can lower the tax burden and may even result in a tax refund that might otherwise not be possible. The Income Tax Act describes certain tax incentives that are available to individuals who are dependent on others because of a mental infirmity. In chapter 6 and particularly in chapter 5 dealing with trusts, I have chosen to use the term cognitive impairment as a more appropriate description. I still use the Income Tax Act term for clarity when quoting or referring directly to that document. https://www.thefamilyguide.ca/

Ed Arbuckle offers The Family Guide on the Family Guide website without a shipping or delivery charge on all orders. You can also order the book on Amazon, Indigo, and Smashwords as a book or in e-book format. There is no other book like this that discusses disability from a perspective that is so helpful to families and their advisors. The book covers the full waterfront of disability from social assistance, estate planning, RDSPs, Henson Trusts and beyond in understandable language for everyone. https://www.thefamilyguide.ca/order

US Voluntary Disclosure Program Ends The IRS recently announced that they are ending the streamlined filing program on September 28, 2018. So, if you are a US c...itizen or you once lived in the US under a green card, this is your last chance to get an immense problem off your back. The IRS recently said the following: Taxpayers have had several years to come into compliance with US Tax Laws under this program. All along, we have been clear that we would close the program at the appropriate time, and we have reached that point. Those who still wish to come forward have time to do so. As indicated above, if you ever lived in the United States as a green card holder (and continued to hold it for eight or more years without properly surrendering it), you may be a US taxpayer and therefore required to file personal tax returns the same as citizens do. This filing requirement does not apply if you have properly surrendered your green card and you have also filed form 8854. Canadians who went to school or worked in the US years ago may be surprised to find they are still US taxpayers. Streamlined filing follows a very specific process so it would not be wise for anyone to do this without professional assistance. Time is very short, so if you are delinquent - time to get on board.

Maximizing Social Assistance As indicated earlier, social assistance can be reduced or eliminated should the person with a disability reach defined thresholds of either assets or income. If the asset threshold is exceeded, benefits will likely be cut off. If the annual income level (budgetary income) exceeds the limit, then social assistance will be reduced dollar for dollar by the chargeable income. In the case of employment and self-employment income, the income amount afte...r government withholdings is reduced by another $200 monthly exemption and only half of the remaining amount reduces social assistance. Certain types of income and assets may be exempt from the calculation, such as income used to pay medical expenses or purchase a home for a person with a disability. The most common way to limit these assets and income thresholds is by holding the property in a trust (Henson trust). The trust allows the trustee to limit the transfer of funds (capital or income) to the person with a disability. Also, if assets are inherited by a person with a disability, this beneficiary may be able to invest the inheritance in exempt assets such as insurance products like segregated funds or an RDSP. Unless the ODSP recipient has the intellectual capacity to manage their own finances or guardianship exists, this may be difficult unless a legal decision maker is involved. The amount of funds that can be transferred to a person with a disability might also be greater than one would expect because families are allowed deductions for amounts spent on disability-related expenses. www.thefamilyguide.ca

Estate Planning - A Different Path Disability makes estate planning challenging because your loved one may not be able to own property or be able to pass it on to other members of your family as you would wish. This may be due to their lack of legal competence or because owning property would limit their right to government assistance. Their inheritances almost always need to be handled differently than for other family members. Conflict and legal complexity can be an issue f...rom the beginning. Recent changes to the tax rules for trusts has made estate planning for a family member with a disability more difficult. Before starting down the estate planning path, families should ponder some important questions regarding their loved one with a disability: How much money do they need to live out their life? Who will manage the funds? What type of accommodation is suitable? How should ownership of their property be structured? Who is going to take care of this when you are gone? Of course, you also need to consider if the plan you develop is fair to others in the family. Will siblings and others in your family participate in the structure you have designed? Estate planning doesn’t start with the writing of a will. It begins much earlier in life as a family goes through the rigours of comprehensive financial planning starting with retirement planning and then estate planningit’s a continuum. The bridge between your situation today and the time when your will takes effect on your death will be governed by you or your financial power of attorney if you cannot handle life’s financial decisions. That too may need different structuring than normal. In some cases, an individual with a disability could outlive parents by several years. Does the structure you have designed facilitate that, and are the documents flexible enough to allow for changes to a new caregiver as you give up that responsibility? Has guardianship been put in place to handle tax and legal issues for your loved one and are successor guardians recommended in your will? https://www.thefamilyguide.ca/

The launch party for The Family Guide was last week and the book is now available! Below is our fair pricing guide. You can order on our website https://www.thefamilyguide.ca/order or email us at [email protected]. Thank you!

Friends, families and advisors, It’s my pleasure to have completed The Family Guide to Disability and Personal Finances. It was a pleasure writing this book for individuals with disabilities, their families, their loved ones and their advisors. I sincerely hope that you enjoy it and that it is a useful book for you in your search for knowledge as it applies to your need for guidance and solutions. The book is not only a source of information, but as you will notice when you r...ead through it, it advocates for better and fairer laws as they apply to disability and a reduction in complexity that should allow governments to help drive change. The book is available on websites such as Amazon, Chapters, Tellwell, and Smashwords. Copies are also available from The Family Guide, offering generous discounts for orders of more than ten books. Please enjoy the book and don’t hesitate to send me any comments you wish to share. https://www.thefamilyguide.ca/