Estée KlarTo Get To The Other Side

Do you have a financial plan for you and your child? I’ve received a few responses to the RDSP post I made last week and some planners wish to give some information. I hope to give everyone a fair say as I will be doing interviews for publication of financial planners on how to plan for yourself and your autistic child’s future. Many thanks to David from RBC for writing this guest piece for this blog. If you have any questions, you can contact David:

David Velikonja, MBA
Investment Advisor
RBC Dominion Securities
(905) 895-2999
david.velikonja@rbc.com

A written financial plan is a tool that will help you reach your personal financial goals more effectively.

Here is a some info on some things single moms and dads of special needs kids should consider. This is a start.

- RDSP
- Henson Trusts
- Tax Planning for Persons with Disabilities
- Financial Planning Worksheet
- list of two estate planning lawyers that have worked with Henson Trusts

I can help you if you provide the necessary information. It’s essential that you be as accurate as possible because your answers form the starting point for your plan. All information is confidential.

Don’t think of this as “paperwork”. It’s about your future. By filling out this worksheet completely, you’ll give me what I need to make you feel secure and comfortable about your understanding of your investment, estate planning and insurance needs.

Whether you’re planning for retirement, your children’s education, trying to reduce your taxes, or just looking for financial clarity, the process starts here because it will help you answer three key questions:

• Where am I now?
• Where do I want to be?
• How do I get there?

Please be as thorough as possible. Don’t omit any information – it’s all important for helping you reach your personal financial goals. Fill the sheet for both you and your spouse.

David has provided a sheet (which I’m sorry did not translate as a proper spreadsheet herein) that he would ask his clients to get them started. Maybe some of you might find this helpful or you can contact David yourself:

Personal

Marital status
• Single
• Couple

Gender

Last name
First name
S.I.N. #
Date of birth (m/d/y)
Occupation
Work phone #
Fax #
Home phone #
E-mail

Address _________________________________________________
City_______________________ Postal Code____________________

Investments

Planned retirement age • 65, or
• age ____ • 65, or
• age____
Last year’s T4 income (pre-tax) $
Principal preservation
(How much do you want left to your estate, if anything, in today’s $’s?) $

For the next two sections on investments you can fill out the boxes or just provide your investment statements:

Registered investments
(RRSP, RESP, defined contribution pension plans)

Owner
(You or spouse) Amount Description Asset Type
(Equities, bonds, GICs) Locked-in
(Yes or no)

Annual RRSP savings for this year you $________ Spouse $_______

Non-Registered investments

Owner Amount Description Asset
Type Realized gain Book
Value Market
Value

Annual non-RRSP savings for this year you $_____ Spouse $______

Government benefits

Do you expect to receive: You Spouse
CPP/QPP • Yes
• No • Yes
• No
Start age _______ Start age _______
Old Age Security • Yes
• No • Yes
• No

Other significant expenses
Any significant cash outlays, like a cottage, child’s education, etc. Enter amounts in today’s dollars and I’ll calculate the inflation amount. Start age and end age refer to expenses in the future that might span a few years. For example, a 4-year college education for a child.

Owner Description Annual amount Start age End age

Other income sources
Other sources like sale of home, inheritance, rental income, etc. In today’s dollars.

Owner Description Annual amount Start age End age

Pension benefits
List your defined benefit pension(s) here if you have any. Once again, if this gets complicated just provide your pension benefit statements and I’ll work from them.

Owner Employer name Annual amount Start age End age Dollar terms (today or future) Growth Bridge benefit Survivor benefit
$ T F % $
$ T F % $
$ T F % $
$ T F % $
$ T F % $
$ T F % $

Life insurance
Life insurance serves two purposes. First, it can replace the income of a spouse in the event of death. Second, it can offset estate taxes, which lets you transfer as much of your property as possible to your heirs – instead of the government. Essentially insurance keeps you on track for your financial plan. Consider what your family would face if you or your spouse died sudden: funeral expenses, your mortgage and day-to-day living expenses would all have to be covered.

Immediate expenses (there are other more complex calculations we can do, but for now let’s capture the basic information)

Mortgage
Emergency funds
Funeral ($5,000 plus)
Travel
Taxes on deemed or actual disposition of assets
Miscellaneous
Business liquidation value

Life insurance policies
Once again, your insurance policies or statements might save you a bit of time.

Owner Description Amount Start age End age Growth
$ %
$ %
$ %
$ %
$ %

Balance sheet

This section is important to give us an overview of where you are today and what kind of flexibility we have in achieving your financial plan.

Current assets
Cash & short-term investments
Other current assets

Long-term financial assets
RRSP investments
Non-RRSP investments
Life insurance cash value
Long-term financial assets

Real estate
Principal residence
Other real estate

Other non-financial assets
Vehicles
Collectibles
Miscellaneous

Total current liabilities
Income taxes payable
Credit card balance(s)
Line(s) of credit
Other current liabilities

Long-term liabilities
Mortgage
Car loan(s)
Investment loan(s)
Other long-term liabilities
—–

This will be the first in a series of posts about financial planning for families of and for disabled persons in Canada.

For those of you investigating like me, ways and means to save for our children’s future, in may be worthwhile looking into the newly instigated Canadian RDSP. In addition to the following press release, visit The Bank of Montreal’s website for more information:

New RDSP enables families to save tax-free for future of disabled Canadians

By The Canadian Press

TORONTO – Families of people with disabilities will be able to set up tax-free savings plans under a long-awaited measure enacted by the federal government.

The registered disability savings plan – RDSP – “is about helping bring more independence to families of persons with disabilities, who are facing challenges, particularly financial challenges, when planning their future,” federal Human Resources Minister Diane Finley said in presenting the program Tuesday.

The RDSP had been proposed in the Conservative government’s March 2007 budget but became effective only this month.

“You know how government works – here we are the end of 2008,” joked Finance Minister Jim Flaherty, joining Finley for the announcement in the lobby of a children’s rehabilitation centre.

The government estimates 280,000 Canadians are eligible to open RDSPs, allowing parents and others to set aside funds for a child with a severe disability.

Ottawa will provide matching grants of up to $3,500 per year, plus a $1,000 bond each year for families with incomes under $37,885. Each RDSP has a lifetime contribution limit of $200,000 from the family and $70,000 from the government.

The program is expected to cost Ottawa about $200 million a year in contributions and forgone taxes.

Flaherty said the deadline for opening an RDSP and making contributions for 2008 has been extended to March 2.

RDSPs are intended for individuals who qualify for the disability tax credit, their families and others. Unlike a registered retirement savings plan, contributions are not deductible. But the money grows grow tax-free and will not be included in taxable income when withdrawn.

Income paid out of RDSPs also will not affect federal income-tested benefits, such as Old Age Security, the Canada child tax benefit and the goods and services tax credit.

The federal government has negotiated with the provinces and territories, and RDSP income and assets will be excluded from benefit clawbacks in Newfoundland and Labrador, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and the Yukon.

Quebec, New Brunswick and Prince Edward Island are exempting RDSP payments from income support calculations up to set limits. In the Northwest Territories, a limited exemption will be allowed.

“We are leading the world in this initiative, and I expect it will be copied in many places around the world,” Flaherty said, explaining that the program’s lengthy lead time arose from the complexity of progressive social and tax policy, including getting other governments onside in not taxing or clawing back the program’s income.

Bank of Montreal, the first major financial institution offering RDSPs, said it received about 600 inquiries on the opening day of the program.