Wednesday, February 11, 2009

Accidents, Trusts and Diability Benefits

For most people involved in a motor vehicle accident, once their lawsuit has come to an end, either by winning in court or by reaching a settlement out-of-court, that would be the end of the matter. For people involved in a motor vehicle accident who are also receiving disability benefits from the provincial government, there is yet one more step to consider.

Individuals in receipt of disability benefits from the provincial government cannot have more than $3000 in their bank account. If they exceed this amout, their benefits are terminated. So, if the individual gets a settlement over this amount, they are at risk of losing their benefits. Until a few years ago this meant that individuals in receipt of disability benefits achieved a somewhat "hollow victory" at the end of a long litigation process. On the one hand they would receive money from ICBC; on the other hand their monthly benefits would be terminated. The good news is that it is now possible for individuals in this situation to establish a Disability Trust. So long as the trust is created properly, the individual can put all of the settlement monies into the trust and still retain their disability benefits. Although the trust will limit, to some degree, what the monies can be used for, it allows a person to keep receiving their benefits.

Another option, just recently available, is a Registered Disability Savings Plan. Money placed in an RDSP is also not considered to be an asset by the provincial government. Therefore, the individual will remain eligible for disability benefits. The extra benefit of an RDSP is that any interest earned is tax-free. A further benefit is that the federal government will match contributions to the RDSP each year. The first $500 is matched three to one for a total of $2000. The next $1000 is matched two to one to a maximum of $3000.

1 Comments:

At 12:35 PM, Blogger Unknown said...

The site looks great and it is always a pleasure to learn more about how people with disabilities can gain more access to financial support.

Keep up the good work!

 

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