# Investing on behalf of someone with special needs



## Juggernaut92 (Aug 9, 2020)

Hello All,

I am interested in starting an investing account for a relative that has special needs (autism). He is currently 23. I wanted to know if there is a special investment account for him or if there any limitations that anyone knows of to what account I could get for him? I am not sure if I can open a TFSA or RRSP for him. I believe he is also on ODSP. I am not sure that is helpful info but just putting it out there. 

I was thinking of depositing a big lump sum like $1000 into the account and then just invest it all into an something like VOO or a world ETF for simpler passive management. 

I am looking to help out the parents build a bit of a portfolio for him for expenses in the future.

Any feedback would be appreciated.


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## Money172375 (Jun 29, 2018)

He may be eligible for A RDSP. Registered disability savings plan (RDSP) - Canada.ca

i would start by looking into that. There are some grants available along with tax benefit.

I know TDDI offers the account.

You can’t open any account for him unless you have a POA. Parents or other “qualified“ family members may be able to open a RDSP if ”competency” is a consideration.


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## Fraser19 (Aug 23, 2013)

I would strongly suggest opening an RDSP for him, and if he is not eligible for the disability tax credit do I recommend doing everything possible to fight for it.

The RDSP offers 300% matching on the first 500 dollars deposited each year, 200% on the following 1000.00
basically 1,500 invested each year can get you 3,500.00 in grants.
Also the RDSP may receive the Canadian Disability Savings bond which can be up to 1,000.00 annually.

CRA will deposit up to 70,000.00 in grants, and I think up to 20,000.00 in bonds.

At 23 years of age, there is a lot of time for the contribution, grants and bonds to compound into substantial wealth without using substantial resources.

Basically 125 a month in deposits get's the beneficiary 375 in government benefits. The one thing that you need to be painfully aware of, there are very few reasons as to how money can be taken out of the plan before age 59 without a claw back of the grants.

But the benefits of a couch potato RDSP are massive and absolutely worth every moment of research you put into it.


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## Juggernaut92 (Aug 9, 2020)

@Money172375 :Thanks a lot for mentioning this. I was thinking there was some account out there for this but was not sure. I will look into what is required for opening the account

@Fraser19 : Thanks a lot for all this information. That is quite a lot of government benefits. I am glad I asked about it. The no withdrawl before age 59 rule makes sense considering how many grants and credits are going in there. I will look into it more.


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## Retiredguy (Jul 24, 2013)

Fraser19 said:


> I would strongly suggest opening an RDSP for him, and if he is not eligible for the disability tax credit do I recommend doing everything possible to fight for it.
> 
> The RDSP offers 300% matching on the first 500 dollars deposited each year, 200% on the following 1000.00
> basically 1,500 invested each year can get you 3,500.00 in grants.
> ...


I agree. I also understand that any trust setup for the PWD will be taxed at the highest tax rates unless the PWD is designated by CRA as disabled. My relative who managed to get their adult child designated by CRA had many years of assessments, school reports etc but CRA required a current psychologists report. 60 pages of docs and 1 year of time and the PWD was designated by CRA.


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## MrMike (Sep 30, 2020)

Fraser19 said:


> The RDSP offers 300% matching on the first 500 dollars deposited each year, 200% on the following 1000.00


*Canada disability savings grant*
This is only if your Family Net Income is less than $97,069/year. If it's over, then you are only eligible for "$1 grant for every 1 dollar contributed, up to $1,000 a year ". So you are match $1 for $1 up to $1K/year.
Government of Canada's website about RDSP

Also of note, you can carry forward up to 10 years of unused grant. 

I'm on the phone with TD now to open an account. My son is 9, turning 10 this year so I think I can open an account, add $10K to it and the government will give me an extra $10K. I'll update to let you know what happens.


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## Fraser19 (Aug 23, 2013)

MrMike said:


> *Canada disability savings grant*
> This is only if your Family Net Income is less than $97,069/year. If it's over, then you are only eligible for "$1 grant for every 1 dollar contributed, up to $1,000 a year ". So you are match $1 for $1 up to $1K/year.
> Government of Canada's website about RDSP
> 
> ...


Now I am not entirely sure of this next part, but the way I understand it is if the beneficiary is under 18, the family net income rule applies, if they are over 18, it based solely on the beneficiaries income.

But you would need to look into it more.


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## MrMike (Sep 30, 2020)

Fraser19 said:


> Now I am not entirely sure of this next part, but the way I understand it is if the beneficiary is under 18, the family net income rule applies, if they are over 18, it based solely on the beneficiaries income.


Yes, I've seen video where they suggest waiting until the kid is 18..... but, why wait? If before, I'll contribute now for the extra $1K match + the dividend/growth I'll get. Then when he's 18, it will switch to only him for the $3,500/year per $1K contributed.

I have an appointment with TD on Tuesday. I'll ask and update then.


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## Fraser19 (Aug 23, 2013)

MrMike said:


> Yes, I've seen video where they suggest waiting until the kid is 18..... but, why wait? If before, I'll contribute now for the extra $1K match + the dividend/growth I'll get. Then when he's 18, it will switch to only him for the $3,500/year per $1K contributed.
> 
> I have an appointment with TD on Tuesday. I'll ask and update then.


I agree with making the contributions earlier, the effects of compound interest should win anyways. I was replying with the intent of the OP reading it as in his case the beneficiary is 23, and the income assessment would likely be based only on the 23 year old's age.


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## Money172375 (Jun 29, 2018)

MrMike said:


> Yes, I've seen video where they suggest waiting until the kid is 18..... but, why wait? If before, I'll contribute now for the extra $1K match + the dividend/growth I'll get. Then when he's 18, it will switch to only him for the $3,500/year per $1K contributed.
> 
> I have an appointment with TD on Tuesday. I'll ask and update then.


I wouldn’t expect clear answers from the bank. It’s likely the person you’re dealing with has done very few, if any, of these. I can’t recall any of my branches opening an RDSP in 20 years. Best to do your own research.


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## Juggernaut92 (Aug 9, 2020)

@Retiredguy :When you say trust are you talking about something other than an RDSP? That is a lengthy process just for the CRA to recognize that a person is considered disabled. 

@MrMike : Are you aware if people outside of the immediate family can contribute to the RDSP and still get the matching from the government? Thanks for posting the update here. 

@Fraser19 : Yes I will look into this more. I found out my relative's dad does have an RDSP. I just need some specifics from the bank. But I was told that it was an extremely convoluted process and that at one point the bank closed the RDSP because the documents were insufficient. 

@Money172375 : For sure. I looked online a bit and like I said above the process to apply for it is convoluted and on top of that the documents you need to collect and submit are pretty crazy as well.


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## Money172375 (Jun 29, 2018)

Juggernaut92 said:


> @Retiredguy :When you say trust are you talking about something other than an RDSP? That is a lengthy process just for the CRA to recognize that a person is considered disabled.
> 
> @MrMike : Are you aware if people outside of the immediate family can contribute to the RDSP and still get the matching from the government? Thanks for posting the update here.
> 
> ...


Not sure if the position exists or if you’ve visited TD already. I would try and ask to speak to the local TDDI Business Development Manager. They assist with large and complex account openings.


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## MrMike (Sep 30, 2020)

Juggernaut92 said:


> @MrMike : Are you aware if people outside of the immediate family can contribute to the RDSP and still get the matching from the government? Thanks for posting the update here.


*Who can contribute to an RDSP?*
Anyone can contribute to an RDSP with the written permission of the plan holder.
Eligibility and contributions - Canada.ca

The plan holder is the person who opens the account if the beneficiary is a minor.


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## gardner (Feb 13, 2014)

MrMike said:


> The plan holder is the person who opens the account if the beneficiary is a minor.


I believe it can also be a person with POA or acting in accordance with a Representation Agreement (in provinces that have these).

My experience is that RBC has the best walk-in support for RDSPs. The branches know what they are and have access to experts. But the actual product is not that great. TDDI has the most flexible full featured product, but I am not aware that anyone at TD knows much about them or how they work.


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## Calgary Bruce (Feb 23, 2021)

Juggernaut92 said:


> Hello All,
> 
> I am interested in starting an investing account for a relative that has special needs (autism). He is currently 23. I wanted to know if there is a special investment account for him or if there any limitations that anyone knows of to what account I could get for him? I am not sure if I can open a TFSA or RRSP for him. I believe he is also on ODSP. I am not sure that is helpful info but just putting it out there.
> 
> ...


Long story short.
I have/had two disabled sons. One died. Both had RDSPs at TD. 
I asked TD to transfer RDSP funds from the one who died into his surviving brother's RDSP. 
It took over 2 months. 
In the process TD decided I was dead and closed my accounts.
Also because of the delay in transferring funds the surviving son did not get the matching government grants.
Insult to injury TD still can't right their wrongs.


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## Juggernaut92 (Aug 9, 2020)

@Money172375 : Thanks for the specific mention. My bank is TD and my relatives dad is TD as well so I will see if I can locate someone with that position title.

@MrMike :I see. but will the government grants still apply for my deposits?

@gardner :Yes from what I have heard TD has a self directed RDSP but other banks have more restrictions. That is a good note about RBC. They are the biggest bank and it would make sense they have plenty of experts regarding different products.

@Calgary Bruce : I am sorry to hear about that loss. That must have been tough. That is quite unfortunate that they closed the account like that. That is pretty messed up.
I talked to my relatives dad and he said something similar happened. He opened an RDSP and contributed regularly and had quite a lot of money in the RDSP. When my relative reached 18 i believe TD sent him a bunch of forms and then my relative's dad tried to fill them out as best as he could but the account ended up getting closed and the extra money got taken away. He did start another plan year or two ago again with TD. However, this experience makes me feel cautious about an RDSP now. I will see if my relative can have a TFSA opened or something like that as that would be simpler. I will see what options are out there and post here what I find.


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## gardner (Feb 13, 2014)

Calgary Bruce said:


> Long story short.


I am very sorry to hear that.



> Also because of the delay in transferring funds the surviving son did not get the matching government grants.


I don't think this should happen:






How much you could get in grants and bonds - Canada.ca







www.canada.ca







> Unused Grant and Bond entitlements: “The carry-forward measure”
> If you opened an RDSP in 2008 or later, and contributed less than the maximum amount, you can receive those Grant and Bond entitlements in future years. You can use these amounts for current RDSPs, or RDSPs opened in January 2011 or later.
> To receive unused Grant and Bond entitlements, you must have qualified to receive the Grant and the Bond in previous years. You can apply until December 31 of the year you turn 49.


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## gardner (Feb 13, 2014)

Juggernaut92 said:


> However, this experience makes me feel cautious about an RDSP now.


This is illustrates why expertise at the FI on the ins and outs of RDSPs is crucial. The rules are complicated and much of the applying for bonds and grants and so forth is actually done by the FI, not the beneficiary or holder.



> I will see if my relative can have a TFSA opened or something like that as that would be simpler.


That is a good point. If the beneficiary is an adult, there should be a TFSA at least to park funds that are in excess of what can attract grants/bonds in the RDSP.


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## MrMike (Sep 30, 2020)

Juggernaut92 said:


> @MrMike :I see. but will the government grants still apply for my deposits?


The grants apply to the money being deposited - doesn't matter who deposits the money (assuming they've been approved to deposit by the holder).


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## Juggernaut92 (Aug 9, 2020)

@gardner : When you say FI you mean financial intermediary such as banks?

@MrMike : I see. That is interesting because I thought they would only allow the immediate guardian/family members to deposit money and get a grants added to the account. Thanks for the clarification.


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## Retiredguy (Jul 24, 2013)

Juggernaut92 said:


> @Retiredguy :When you say trust are you talking about something other than an RDSP? That is a lengthy process just for the CRA to recognize that a person is considered disabled.
> 
> 
> Yes. - I was not speaking of RDSP, I was speaking about a Trust for a PWD. However, I expect that to set up a RDSP you'd need CRA to classify the PWD as disabled, and that could only be done with application and supporting documentation. That would seem to make sense,to me, if tax benefits flow to a disabled person through a RDSP CRA would need to accept that the disabled person was a PWD.
> ...


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## MrMike (Sep 30, 2020)

Juggernaut92 said:


> @MrMike : I see. That is interesting because I thought they would only allow the immediate guardian/family members to deposit money and get a grants added to the account. Thanks for the clarification.


*Who can contribute to an RDSP?*
Anyone can contribute to an RDSP with the written permission of the plan holder. 

Eligibility and contributions - Canada.ca

And when I met with TD, they said that any money deposited will get the grant. I haven't tested for myself to confirm but mostly likely they know what they're talking about.... most likely, but not always haha


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## Juggernaut92 (Aug 9, 2020)

@Retiredguy :Thanks for the links. I will check it out. Thanks for the clarification on that trust part. Damn! 3k is a lot for an assessment but it makes sense considering you get an official report about the diagnosis. I will keep copies of everything. I am hoping that fee is tax deductible. 

That is great that you helped your friend out.

@MrMike : lol thanks for the additional info. I am with TD and so is my relative. For the most part they are pretty helpful so I will see about this situation.


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