If you live in Ontario and your child has a developmental disability and is under the age of 18, you, as a parent, can open an RDSP account for your child, become the “holder” of the plan and remain the holder after your child has become an adult. Attempting to open an RDSP account for a child over the age of 18 with a developmental disability has been difficult for many.
The holder of an RDSP must have the legal capacity to enter into a contract in order to open an RDSP if they are an adult. Many adults with developmental disabilities do not have the legal capacity to sign a legal contract, however nobody can do it on their behalf unless they have secured power of attorney or legal guardianship, neither of which is easy to obtain or an ideal solution. These circumstances have made it very difficult and sometimes impossible for individuals with developmental disabilities to secure a very important benefit.
Some financial institutions have looked the other way, allowing parents or the individuals themselves to open up RDSP accounts, potentially creating a legal liability for the institution and/or the financial advisor. In many cases, all parties involved have turned a blind eye, given the obviously unfair circumstances.
While issues of legal representation are a matter for the provincial governments, the federal government, attempting to address the issue, has created an interim solution for the next few years. The 2012 federal budget has expanded the definition of who can be the holder of an RDSP. Once the budget is passed and until the end of 2016, a parent, spouse or common-law partner of an adult person with a disability can open an RDSP account and be the “holder” of the account on the individual’s behalf.
Until the end of 2016, a parent, spouse or common-law partner of an adult person with a disability can open an RDSP account and be the “holder” of the account on the individual’s behalf.
Over the next three and a half years, the provincial governments that have not implemented a long-term solution are expected to do so. Provinces are expected to develop and enact appropriate legislation to address the issue of opening an RDSP account for adults with developmental disabilities.
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You can contact Ron Malis at rmalis@monarchwealth.ca
In 2010 I opened an RDSP for my 30 year old daughter and I am making the contributions. One the budget is passed, can it be changed so that I am the holder of the account on her behalf?
Is it fair to assume your daughter has a developmental disability that hinders her ability to enter into a contract, legally? Even though regulations have not allowed for people who do not have the ability to enter into a contract to open an RDSP, there have been many occasions when the bank has turned the other way and allowed such a person to be the holder of their own RDSP. As far as I can tell, a parent won’t be able to request to become the holder of the plan, if their son or daughter is already the plan holder.
Over the next few years, the provincial government will need to address the issue of who can be a holder of a plan, since the federal changes are temporary, lasting until the end of 2016. It is possible that the province’s approach will address your circumstances.