Like it or loathe it, the recent federal budget is an election budget, and strives to do something for everyone.

From an estate planning prospective, it reaches out to families with a disabled member, by establishing the Registered Disability Support Plan (“RDSP”).

The plan is available in 2008, and is similar in style to the current Registered Education Savings Plan. An individual who is eligible for the disability tax credit, their parent or legal representative may establish an RDSP.

The intent is that the RDSP would provide an income for the disabled individual once they attain the age of 60.

Under an RDSP, parents, beneficiaries or others will be able to contribute a lifetime maximum of $200,000. Contributions can be made until the beneficiary is 59. While contributions are not tax-deductible, investment income earned on investments within the plan will accrue tax free, and will be attributed to the beneficiary when paid out.

The Government will provide matching contributions, depending on family income. The matching grants are between 100 and 300%! The lifetime matching grant is $70,000.

Benefits paid out under the RDSP will not reduce any federal income-tested benefits. It is stated that the federal government will work with the provinces in order to ensure that the RDSP is “an effective saving vehicle to improve the financial security and well-being of children with severe disabilities.”

The effectiveness of the meshing between the federal plan and the provincial support programs, such as Ontario’s Ontario Disability Support Plan, is yet to be seen.

Thank you for reading,

Paul Trudelle