Disabled clients want knowledgeable advisors

Clients appreciate advisors who understand disability benefits, because few people can navigate the technicalities, a Toronto-area client says.

In fairness, “ODSP and RDSP rules are overwhelming,” says Karen (not her real name), who works part-time and draws from the Ontario Disability Support Program. A resourceful client, she knows the rules inside out “as a matter of survival.”

Read: Planning for disabilities

But she points out many disabled people can’t do the same research.

“It’s difficult to be organized, and they don’t always have a lot of support,” she says. Some can’t work or live on fixed incomes, so they may not be able to afford Internet access—a source of updates about benefits. Others forgo phones and aren’t reachable by support workers.

As a result, many who are eligible for benefits don’t get them, and those who do may not be maximizing them because they’re working off inaccurate information.

Read: A Henson Trust alternative

For instance, few people know ODSP recipients are allowed to hold up to $100,000 in a segregated fund (see below). Ron Malis, a Toronto advisor who works with disabled clients and their families, says even the people who work at ODSP don’t know this. He usually has to show program staff the directives before they’ll believe him.

Karen says there are plenty of resources for concerned advisors, including:

• Special Needs Planning Group
• ODSP Action Coalition
• Local poverty lobby groups
• Community Living Ontario
• Community Legal Education Ontario
• Arch Disability Law Centre

Karen says if she were looking for an advisor, she’d want her to be well-versed in:

• ODSP directives. “That’s the bible,” she says.
• Henson Trusts, which are absolute discretionary trusts that allow clients to remain eligible for ODSP.
• How investment income affects benefit programs, and what assets are allowed. A client can hold up to $100,000 in a combination of a segregated fund, cash surrender value of a life insurance policy and inherited funds in trust without affecting ODSP eligibility. (In other words, she cannot hold $100,000 in a seg fund and also $20,000 in an inherited trust.) Also, she cannot hold more than $5,000 in non-exempt assets, which include cash, stocks, bonds, mutual funds, RRSPs, cars and investment properties. So advisors must carefully monitor investment holdings in case interest pushes the total above the limit.
• How employment and other income affect ODSP. “You’re not allowed to receive more than $6,000 in any 12-month period for non-disability-related expenses,” says Malis. “That’s not a calendar year; that’s a rolling 12 months. Money withdrawn from an RDSP is not subject to the $6,000 rule.”
• How inheritances affect benefit programs. For more, read “Tips for giving inheritances to disabled children,” by Carol Bezire.
• RDSP rules. Read “2 things to watch with RDSPs,” by Carole Bezaire, and “5 improvements to the RDSP,” by Jacqueline Power.
• Subsidized housing criteria. In Toronto, this is administered by Housing Connections.
• How to access the Disability Tax Credit, which often recognizes physical disabilities, but not other kinds. Criteria include:
  • Impairment in physical or mental functions has lasted, or is expected to last, for a continuous period of at least 12 months
  • Being blind, on life-sustaining therapy, or restricted in basic living activities

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.