Let’s begin by identifying the key players. The individual who opens and manages a Registered Disability Savings Plan (‘RDSP’) is known as the ‘holder’. The holder is also responsible for making or authorizing contributions to the RDSP. The ‘beneficiary’ is the individual with a disability for whom the RDSP was established.
The rules surrounding who can be a holder and who becomes the holder when the beneficiary reaches the age of majority can be confusing. These rules are a combination of the provincial laws dictating the age of majority, general laws regarding a person’s competency to enter into a contract, and federal laws governing the setting up of RDSPs.In some situations, it is possible to have joint holders of an RDSP. For example, if the holder is the legal parent of the beneficiary and the beneficiary has reached the age of majority and is legally competent to enter into a contract, he or she may be added as a joint holder of the RDSP. It may be possible for the legal parents of a beneficiary to be the joint holders. If one holder passes away, the surviving holder continues to manage the RDSP.
What happens to the RDSP if the sole holder dies?
Under the current RDSP rules, if the sole holder (who is not the beneficiary) dies, the beneficiary becomes the new holder. This may present an issue if the beneficiary is not capable and does not have a Power of Attorney for Property. A court application to appoint a guardian of property of the beneficiary may be required to replace the deceased holder.
RDSPs are more than just a simple savings plan for those with disabilities as they have many benefits but they can be confusing. Proper advice is essential.
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