Raising a child who has a disability requires a great deal of extra time to provide and arrange care. In addition, wealth planning issues are involved, but you can get help with financial matters.
You want to take advantage of any available tax relief now and ensure your child is properly cared for after your passing. With our assistance, input from a medical practitioner, and guidance from a lawyer and a tax advisor, the process will go more smoothly.
A valuable tax credit and a gateway
If your child has a significant physical or mental impairment, you can apply for the federal disability tax credit. The credit provides substantial tax relief that can be transferred to a parent.
A child may qualify for the credit if they have a severe and prolonged impairment that restricts their ability to perform one of the basic activities of daily living, including walking, dressing, feeding, eliminating, hearing, speaking, vision or mental functioning. An individual may also qualify if their impairment is not severe, but they are significantly limited in performing two or more of these activities.
To apply, you must submit the Disability Tax Credit Certificate (form T2201), which includes a section for a qualified medical practitioner to complete. The practitioner must be acceptable for the specific diagnosis, such as autism, cerebral palsy, Down syndrome, severe arthritis, cystic fibrosis or an intellectual disability. Note that the Canada Revenue Agency (CRA) makes a decision based on how the impairment affects daily living, not solely on the diagnosis.
Saving for the child’s future
Approval for the disability tax credit opens the door to other opportunities, as it is required for the Registered Disability Savings Plan (RDSP) and the child disability benefit. An RDSP helps families provide for the long-term financial security of a family member with a disability. Contributions grow tax-deferred, and the plan may be eligible for government grants.
If you choose an RDSP, we’ll ensure your investments align with your objective, time horizon and risk tolerance. We’ll work with you to develop an investment strategy that takes into account the long-term benefits of making significant early contributions and leveraging grant money for annual contributions.
Establishing a trust
If you plan to leave an inheritance to a child with a disability, a common approach is to set up a Henson trust.1 This trust allows a beneficiary to receive trust funds without losing their government assistance benefits. A trust may be funded with cash, investments, property or life insurance.
You must give careful thought when choosing the trustee. Beyond understanding your child’s financial needs, the trustee is responsible for managing the trust assets and filing trust tax returns. Some parents name co-trustees and may choose a professional trustee.
Many parents use both an RDSP and a Henson trust to support their child, while others choose one of these methods, and some may use a different strategy altogether. It’s important to work with us, your lawyer and tax advisor, to develop a plan that suits your particular situation.
1 A Henson trust can hold an unlimited amount of assets, but note that in Newfoundland and Labrador, a trust exceeding $100,000 makes the beneficiary ineligible for government support.
This article is excerpted from the Well‑Advised Fall 2026 Newsletter and published on behalf of your financial advisor for clients residing in jurisdictions where they are registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither CI Assante Wealth Management Ltd. their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. CI Assante Wealth Management is a registered business name of Assante Wealth Management (Canada) Ltd. CI Assante Wealth Management Ltd is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization.
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