All About Estates

Welcome Amendments to the ODSP General Regulation

In my last blog, I began looking at the treatment of the “matrimonial home” under the Ontario Family Law Act, and promised to continue that discussion in my next blog, which of course is this blog. I have decided to put that discussion over to my next blog, and instead discuss some recent and, more importantly, very good, news for individuals who receive benefits under the Ontario Disability Support Program (“ODSP”).

I previously blogged about a prior round of changes to the ODSP regulations which increased both the asset limits for ODSP recipients (i.e. the value of non-exempt assets above which a person is no longer eligible for benefits) and also the amount an ODSP recipient can receive in a 12-month period as “voluntary payments”, such as payments from a trust, gifts, and life insurance proceeds. Those changes were indeed welcome. However, I recently read an article by Kathryn Balter that outlines a new round of changes to the ODSP regulations that are even more significant for ODSP recipients, and also planners.

Ontario Regulation 278/18 (“Amending Regulation”) was made on April 18, 2018 and filed on April 20, 2018. The Amending Regulation amends Ontario Regulation 222/98, which is the General ODSP regulation (“ODSP Regulation”). Section 43 of the ODSP Regulation sets out items that will not be considered income of the ODSP recipient (i.e. are “exempt income”), and accordingly will not impact the ODSP recipient’s monthly income support. Section 28 of the ODSP Regulation lists items that are not considered assets of the ODSP recipient (i.e. are “exempt assets”), and accordingly are not counted toward the prescribed asset limit for non-exempt assets. Among other changes, the Amending Regulation amends both of these sections.

The exempt income rules in subsection 43(1) of the ODSP Regulation are amended to remove the limit of $10,000 in any 12-month period for “payments from a trust or life insurance policy or gifts or other voluntary payments”. These changes are effective on November 1, 2018. This will have a positive impact on ODSP recipients who are beneficiaries of Henson trusts. Although Henson trusts are exempt assets, payments to the ODSP recipient from a Henson trust are income to the ODSP recipient to the extent they exceed the $10,000 limit in any 12-month period for voluntary payments (or a lesser amount if the ODSP recipient receives voluntary payments from other sources in the 12-month period, since the $10,000 limit is an overall limit for all voluntary payments in the period). Similarly, family members (and others) will be able to make inter vivos gifts of any amount to ODSP recipients. Prior to this change, voluntary payments above the $10,000 limit could only be made without impacting income support if they were applied to pre-approved (by the Director) disability-related items or services. An important caveat is that the current asset limits have not changed, so although the limit for voluntary payments has been removed, it would still not permit an ODSP recipient to accumulate non-exempt assets above the prescribed limit.

However, the changes to the exempt asset rules in the Amending Regulation do enhance the ability of an ODSP recipient to accumulate liquid assets. Subsection 28(1) of the ODSP Regulation is amended to include funds held in RRSP’s and TFSA’s as exempt assets. This will enhance the ability of ODSP recipients to save for the future. As Kathryn Balter notes in her article, this is welcome news for ODSP recipients who do not qualify for the disability tax credit and accordingly cannot open an RDSP (which is also an exempt asset). I would add that it will also open up new savings opportunities for ODSP recipients who may have reached the lifetime RDSP contribution limit of $200,000. The changes to the exempt asset rules are effective September 1, 2018.

About Darren Lund
Darren Lund is a member of the Trust, Wills, Estates and Charities at Fasken, Toronto office. Darren has expertise in a broad range of estate planning matters, including multiple wills, inter vivos trusts, disability planning, estate freezing, and planning for beneficiaries and assets outside Canada. Darren advises trustees and beneficiaries on all aspects of estate administration, both contentious and non-contentious, and his experience includes passing of fiduciary accounts, trust variations, post-mortem tax planning, and administering the Canadian estates of non-residents. He also speaks and writes on a variety of related topics such as estate planning for spouses and couples, inheriting overseas property and estate planning for persons with disabilities. He previously practised estates law at a large national law firm. Email: dlund@fasken.com

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