Recent changes to the Ontario Disability Support Program (ODSP) give individuals with disabilities, their families and the financial advisors they work with a little breathing room in the financial planning stage.
On Sept. 1, the Ontario government made several changes to the ODSP. These changes include increasing the monthly payment by 2%, as well as increasing the liquid assets and cash gifts that recipients may receive without reducing their ODSP benefits.
The ODSP is a government-sponsored social assistance program available to individuals with disabilities who are 18 years of age and older, subject to certain asset and income restrictions. The amount an individual receives can vary, but the 2% increase in monthly payments means that a single person living independently who qualifies for the ODSP now will receive $489 a month for shelter costs and $662 for basic needs, for a total of $1,151 per month.
In addition, disabled individuals and couples will be able to own more assets without jeopardizing their entitlement to benefits under the program.
The government significantly raised the asset threshold after which the ODSP payment is reduced or eliminated to $40,000 for an individual and $50,000 for couples. The previous asset limits were $5,000 and $7,500, respectively. This change means that individuals with special needs now may hold up to $40,000 in liquid assets in their own name without risk of losing their ODSP benefits.
"We used to have to be really careful that no more than $5,000 went into the hands of the person with the disability, so a lot of our planning was surrounding that," says Graeme Treeby, co-founder and advisor with the Special Needs Planning Group in Stouffville, Ont.
Prior to the change, for example, you may have had to talk to clients in situations in which a friend or family member wished to leave money to an ODSP recipient via an inheritance trust for the person having a disability. Only relatively small amounts would meet the ODSP threshold criteria in these situations. Now, provided the funds are less than $40,000 and the donor is competent, money can be given directly to the disabled individual without the trouble or expense of establishing a trust.
"It sounds silly, but people were really stressing over receiving a $12,000, $15,000, $20,000 inheritance," says Treeby. "So, to have [the asset threshold] increase to $40,000, we've cut out a lot of aggravation and concern for people."
Besides permitting people with special needs to hold more assets in their own name, the changes to the program mean those people also can receive more monthly income from trusts.
For example, prior to Sept. 1, individuals with special needs could receive up to $6,000 over a 12-month period in voluntary gifts or withdrawals from trusts or segregated funds. That amount has been increased to $10,000, meaning you and your clients can budget for a slightly higher payout from a trust or segregated fund to a disabled family member.
"What that means is that it's now a higher income stream that can go to the [disabled person] and not have any affect on ODSP because it's an exempt asset," says Fred Ryall, an independent financial advisor with Fred Ryall & Associates in Mississauga, Ont. "So, that means there's more money to do what they want."
Besides the asset threshold increases, the Ontario government has exempted certain gifts from being considered income for the disabled person.
Before the implementation of these changes, if a family member or friend provided an individual with disabilities a gift, such as a house, first and last month's rent or a car, the disabled person would lose their ODSP payment for the month in which the gift was received.
As a result of the changes to the program, ODSP payments will continue for the month in which any such gift is received, as well as in the months following receipt of the gift.
Yet, despite the improved breathing room these changes allow, advocates for people with disabilities argue that there still is plenty of room for further improvements in the program.
"It would be nice if the Ontario government would take some bolder steps in this area," says Brendon Pooran, founding lawyer with Pooran Law Professional Corp. in Toronto. For example, Pooran had hoped that the government would follow the example of other provinces, such as British Columbia, which increased its asset threshold for its provincial support payment program to $100,000 for an individual in 2015.
As well, Pooran would like to see the government eliminate restrictions on voluntary gifts. Such gifts from family members could, for example, help individuals with disabilities pay for their housing.
"There are a number of people who are beneficiaries of trusts or who may have friends or family who are looking to provide support, even if it's a basic need to pay the rent. But the limit on gifts prohibits that," says Pooran. "And that's quite frustrating."
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