A. A Simpler Process for Adults to Name an RDSP Legal Representative
The LCO’s recommendations are about what changes would be needed to create a simpler process to name a plan holder in Ontario, called an RDSP legal representative.
We recommend that adults be allowed to name a family member, friend or community organization as their RDSP legal representative. This would give adults the autonomy to choose whom they would like to represent them for the RDSP in a document that is like a power of attorney. It could be done at home or with the help of someone else, such as a lawyer.
We also recommend changes that would be needed to make a simpler process work.
It is important to know that the LCO’s recommendations take into account our larger project on Legal Capacity, Decision-Making and Guardianship.
There are certain issues that came up in the RDSP project that the larger project will decide. We tried not to decide issues in the RDSP project that could limit the options for change that we are reviewing in the larger project.
*You can see the full list of our ten recommendations in the Final Report, Chapter V, “List of Recommendations”.
*The LCO’s discussion paper in the larger Legal Capacity, Decision-Making and Guardianship project is available online here:
1. When Can the Simpler Process Be Used?
The simpler process that we recommend is meant for situations where there are concerns about an adult’s capacity to be a plan holder and the adult does not have a guardian or attorney.
Capacity to be a plan holder means being able to understand facts about the RDSP and the consequences of making (or not making) decisions about the RDSP. Adults themselves might believe that they do not have capacity to be a plan holder. A financial institution employee, such as a bank advisor, might also believe that an adult does not have capacity and refuse to open an RDSP, unless there is another legally authorized person in place. In these situations, adults could use the simpler process to name an RDSP legal representative.
The simpler process to name an RDSP legal representative is meant for situations where
- there are concerns about an adult’s capacity to be a plan holder and
- the adult does not have a guardian or attorney.
2. Who Can Use the Simpler Process?
Similar to what is needed to make a power of attorney, adults who are able to meet a legal test for capacity could name an RDSP legal representative under the simpler process.
Because we heard that the test to make a power of attorney has been too difficult for some adults with disability to name a plan holder, we recommend an easier test.
In the Final Report, we discuss two tests: the common law test and the British Columbia test under the Representation Agreement Act. Our preference is for a test that is based on the common law. But if the Ontario government wants an even more flexible test, it could choose the test from British Columbia.
The Common Law Test
The common law is a type of law that comes from court decisions. There are tests for capacity under the common law that are already used in Ontario for certain decisions. The common law was also the original source for the tests in the Substitute Decisions Act, 1992.
The common law test requires that adults have the ability to understand facts about naming an RDSP legal representative and the possible consequences.
A test used in Saskatchewan that is similar to the common law test has been described as setting a low requirement. For instance, in that province, adults just need to understand that they are naming a parent or other person to set up a savings account. The common law test can also be changed in different ways to make it more flexible.
The British Columbia Representation Agreement Act Test
The British Columbia test for capacity under the Representation Agreement Act is the most flexible test in Canada. It is very different from tests that are used in Ontario.
The LCO heard that the factors listed in this test can be confusing and create risks of financial abuse. Therefore, we recommend that the Ontario government choose the British Columbia test only if it thinks that the common law test is not flexible enough for beneficiaries to use.
The British Columbia test has four factors. The full test is found in Appendix A of this summary. The factors include the communication of a desire to have a representative and the existence of a trusting relationship with the representative.
*For more information on who we recommend should be able to use the simpler process, see the Final Report at pages 33 to 38.
*We explain the tests for capacity under the common law and the British Columbia Representation Agreement Act in the Final Report, Chapter IV.C.3, “Capacity Criteria to Grant a Personal Appointment”.
3. What if Adults Disagree with an Opinion about their Capacity to Be a Plan Holder?
If an adult disagrees with a financial institution employee’s opinion that he or she is incapable of being a plan holder, the adult could ask for a letter of opinion from a “capacity assessor”. A letter of opinion from a capacity assessor that says an adult is capable of being a plan holder for the RDSP might change a financial institution employee’s mind. However, it is not guaranteed that it will change the financial institution employee’s mind.
Capacity assessors are professionals who give capacity assessments for different reasons. Capacity assessors charge fees that are less expensive than going to court. The capacity assessment can take place in the community; for instance, it can take place at the adult’s home.
Adults wishing to disagree with a financial institution employee’s opinion about RDSP decision-making would need to ask for a letter of opinion only about the capacity to be a plan holder for the RDSP.
It would be very important to be clear with the capacity assessor about the purpose of the letter of opinion to prevent a possible finding of incapacity that is not related to the RDSP and that might affect the person’s ability to deal with other types of property.
*For more information, see the Final Report Chapter IV.C.1, “Determining the Beneficiary’s Capacity to Be the Plan Holder”.
B. Who Can Be an RDSP Legal Representative
In our consultations, people said that adults should be able to choose from a wide-range of RDSP legal representatives as long as there are protections from financial abuse.
Normally, adults can name a family member or friend in a power of attorney. In the RDSP project, we recommend that community organizations be added to this list.
There are many adults who may not have a trusted family member or friend to be their RDSP legal representative and who rely on service providers. Some community organizations told the LCO that they already help adults with money, such as ODSP payments, and that they would be willing to be RDSP legal representatives.
Community organizations have different responsibilities than individuals and there is a risk that they may not use their authority properly. Therefore, we say that community organizations should be approved by a government office to be an RDSP legal representative.
If an adult names a community organization, we also recommend that the community organization have special duties, such as keeping separate records of each beneficiary’s RDSP and regularly reviewing these records.
An RDSP legal representative could be a
- family member,
- friend, or
- a community organization that is approved by a government office.
*We recommend two ways that community organizations could be approved by a government office. For more information on these recommendations, see the Final Report, Chapter IV.C.7, “Who May Act as an RDSP Legal Representative”.
C. The RDSP Legal Representative’s Responsibilities
1. Opening an RDSP and Making Decision about Money in the RDSP
The LCO recommends that RDSP legal representatives have authority to do everything that a plan holder can do, including opening an RDSP and making decisions about money in the RDSP.
When RDSP legal representatives make decisions, they should have the same duties as a person named in a power of attorney who makes decisions for an adult who is found to be incapable of managing property. These duties include encouraging the adult’s participation in decision-making, to the best of his or her abilities, and consulting with supportive family members and friends.
RDSP legal representatives should be required to make decisions about the RDSP that are based on decisions made by the adult about personal care (or another person with legal authority to make decisions about the adult’s personal care). If their decisions will have an effect on the adult’s personal comfort or well-being, they should also consider that effect and determine whether a decision is for the adult’s benefit.
The RDSP legal representatives’ duties need to be performed diligently, with honesty and integrity and in good faith, for the adult’s benefit.
We recommend that RDSP legal representatives have authority to
- open an RDSP,
- consent to money being put into the RDSP,
- make investment choices, and
- ask for payments to be made to the beneficiary.
2. What Happens to Money Paid From the RDSP?
Beneficiaries must begin to get money from an RDSP starting at the age of 60. Their money comes out on scheduled dates in amounts that are set by the federal government. But plan holders can sometimes ask for extra, one-time payments to go to beneficiaries.
Under the Income Tax Act, plan holders can make decisions about money while it is still inside the RDSP at the financial institution. However, plan holders cannot make decisions for beneficiaries about how they spend their money after it comes out of the RDSP.
We recommend that RDSP legal representatives have the same responsibilities and limitations as plan holders. We do not recommend that they have authority to control an adult’s spending money because it could increase opportunities for abuse. We are also concerned that giving RDSP legal representatives more authority would create confusion about their responsibilities.
Adults with legal capacity who get payments from the RDSP can manage their money alone or with support from family and friends, depending on their choice. Otherwise, if an adult is not legally capable of managing his or her payments, the rules in place under the SDA would apply.
As an added protection against financial abuse, we believe that when RDSP legal representatives want to make a special request for a payment to go to the adult, they should first consider whether the adult is legally capable of managing the payment, and then follow certain rules based on their opinion.
Adults who get payments from the RDSP can manage their money alone or with support from family and friends.
If an adult is not legally capable of managing money, the rules in place under the SDA apply.
RDSP legal representatives who want to ask for money to go to an adult should have to consider if the adult is legally capable of managing the money and to take protective steps based on their opinion.
*Our reasons for suggesting that an RDSP legal representative have the same responsibilities as a plan holder are reviewed in the Final Report, pages 41 to 47.
*We recommend that RDSP legal representatives have special duties before asking for one-time payments in Chapter IV.C.4, “Countering the Increased Opportunities for Financial Abuse”.
D. Protecting Adults against Financial Abuse
Giving another person the responsibility to make decisions about an adult’s money creates an opportunity for financial abuse. In our Final Report, we recommend that a number of protections be put in place to secure beneficiaries against this risk.
We believe that beneficiaries should have the same protections they would have under the Substitute Decisions Act, 1992 for regular powers of attorney. These protections include that
- the document naming the RDSP legal representative must be witnessed by two people who sign the document,
- some people cannot witness the document being made because there might be a conflict of interest,
- RDSP legal representatives must keep records about their decisions, and
- the Office of the Public Guardian and Trustee must investigate complaints that an adult is incapable of managing property and that serious harm is happening or could happen.
In the last section, we reviewed other special protections that the LCO recommends. For instance, we recommend that RDSP legal representatives be prohibited from controlling an adult’s spending money after it comes out of the RDSP.
It is important to know that all beneficiaries have protections under the Income Tax Act, for the money that is kept inside the RDSP at a financial institution.
Protections under the Income Tax Act include limits on the timing and amount of payments. Financial institutions must also contact the federal government if they are aware that the RDSP is not being or is likely not to be managed entirely for the adult’s benefit.
The LCO recommends that adults have the same protections they would have under the Substitute Decisions Act, 1992 for regular powers of attorney.
All beneficiaries have important protections under the Income Tax Act for money while it is inside the RDSP.
We also recommend that RDSP legal representatives have special responsibilities to protect RDSP beneficiaries.
*More information on protections against financial abuse can be found in the Final Report, Chapter IV.C.4, “Countering the Increased Opportunities for Financial Abuse”.
E. Ending the RDSP Legal Representative’s Responsibilities
We suggest that the RDSP legal representative’s responsibilities end if a guardian or attorney is named who has authority to be a plan holder.
There are also other situations where a power of attorney will end under the Substitute Decisions Act, 1992 that we think should be the same for RDSP legal representatives.
For instance, a power of attorney ends if the adult cancels it. Under the Substitute Decisions Act, 1992 the process to cancel a power of attorney is like the process to make one. The adult must make a document and have it witnessed by two people who sign the document (the people must be allowed to be witnesses).
The adult must also meet a test for capacity to cancel a power of attorney. The test is the same as the test for capacity to make a power of attorney. Depending on what the Ontario government decides, for the RDSP, this might be the test under the common law or the British Columbia Representation Agreement Act.
Another example is if an RDSP legal representative wants to resign. Attorneys can resign if they tell certain people in writing, including the adult.
*For more information on how to end an RDSP legal representative’s responsibilities, see the Final Report, Chapter IV.C.8, “Terminating the Personal Appointment”.
F. Making Other Individuals and Organizations Feel Secure with a New Process
Individuals and organizations that are not the beneficiary or the RDSP legal representative may be affected by a simpler process. Financial institutions are an example. They told the LCO that they want to feel secure against legal risks that could affect them when they follow an RDSP legal representative’s decisions.
The Substitute Decisions Act, 1992 has protections for other individuals and organizations that rely on an attorney or guardian. The LCO suggests that they also be protected against some legal risks when the simpler process is used.
For instance, if the document naming an RDSP legal representative was not made properly but the RDSP legal representative still makes decisions for the beneficiary, others should be able to rely on the decisions as long as they did not know about the problem and act in good faith.
*Our suggestions for making others feel secure with a simpler process are discussed in the Final Report, Chapter IV.C.6, “Providing Third Parties with Certainty and Finality”.
G. Accessible Information for the Public
It is very important to give information to the public about using the simpler process. Information should be in accessible formats, languages and places.
Adults often learn about the RDSP by talking to their supporters and service providers. Therefore, the LCO suggests that information about the simpler process be sent out through the community networks of adults with disability.
We think that helpful information might cover issues such as how to know if a beneficiary has capacity to be the plan holder and the responsibilities of RDSP legal representatives.
To make this information as clear as possible, we suggest that the Ontario government make an information booklet for adults with disability, RDSP legal representatives and others.
We recommend that the public be given information on how to use the simpler process in accessible formats, languages and places.
H. Recognizing Plan Holders Named in Other Provinces
Plan holders must be named under laws dealing with capacity issues in Canadian provinces and territories. This can create problems if an adult wants to move to Ontario from another place and keep the same plan holder because the laws are different.
The LCO reviewed laws in other provinces and territories to understand how plan holders can be named there. We considered these different laws when we made our recommendations for Ontario. In a number of places a plan holder can be named through processes that are similar to our recommendations (for instance, British Columbia, Newfoundland and Labrador, and Saskatchewan).
Still, if an adult moves to Ontario from another province or territory, we believe that there should be a way to allow a plan holder to continue to represent the adult. The Substitute Decisions Act, 1992 has a way to recognize attorneys and guardian named in other places. We also recommend a similar way to recognize plan holders in Ontario.
Adults could have problems with their RDSP if they move across the country to Ontario because the laws to name a plan holder are different in Canadian provinces and territories.
We recommend a way to recognize plan holders that were named under the law in other places to continue to represent beneficiaries in Ontario.
*We discuss the issue of recognizing plan holders named in other places in the Final Report, Chapter IV.D.2, “Promoting Coherence across Canada”.
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