The Government of Ontario requested that the Law Commission of Ontario (LCO) undertake a review of how adults with disabilities might be better enabled to participate in the Registered Disability Savings Plan (RDSP). The LCO Board of Governors approved this project on Capacity and Legal Representation for the Federal RDSP in April 2013. The Government of Ontario announced its request and the LCO’s agreement to undertake the project in the 2013 Ontario Budget, A Prosperous and Fair Ontario, in May 2013.
The purpose of the LCO’s project is to recommend the creation of a streamlined process to appoint a legal representative for adults who are eligible for an RDSP but who are unable to establish a plan due to concerns about their legal capacity. The LCO is currently engaged in a large, multi-year project that comprehensively reviews Ontario’s laws regarding legal capacity, decision-making and guardianship. It was in the context of that larger project that the Government of Ontario asked that we undertake this project on the RDSP as a separate review to be delivered on a priority timeline.
The introductory chapter to the report discusses the relationship between these two projects. It explains how we have tailored our research, analysis and recommendations where there are major areas of overlap in order to respect ongoing developments in the larger project and to achieve the most appropriate outcome for RDSP beneficiaries.
The introductory chapter also presents how our project on the RDSP came to be. The RDSP is a long-term savings vehicle created by the federal government to assist persons with disability with financial security. In 2011, the federal government undertook a review of the RDSP program. Over the course of that review, adults and their families identified issues of legal capacity and representation as a barrier to accessing the RDSP.
Under the Income Tax Act (ITA), adults can open an RDSP for themselves and decide the plan terms as the “plan holder”. However, the ITA provides that where an adult is not “contractually competent to enter into a disability savings plan” with a financial institution, another “legally authorized” person must act as the plan holder. Therefore, a financial institution may decline to enter into an RDSP arrangement with a beneficiary who does not meet the common law test of capacity to enter into a contract. An adult or another interested person, such as a family member, may also believe that an adult lacks capacity to establish an RDSP and wish to appoint a plan holder before approaching a financial institution.
The RDSP program does not provide a means to name a plan holder. Instead, a plan holder must be appointed under separate provincial laws. The existing provincial laws that apply in these circumstances, however, tend to address areas of property management that are broader than the RDSP, such as paying bills, buying and selling real estate, and covering daily expenses. With few exceptions, they are also very much focused on protecting adults from the serious harm that can occur when they are unable to make decisions for themselves; rather than on facilitating access to a benefit program, such as the RDSP. The federal government has reported that in some provinces, opening an RDSP can involve a considerable amount of time and expense and may have a significant impact on the beneficiary.
Following our presentation of essential background to the RDSP in Chapter II, the third chapter of the report explains the rationale for a streamlined process to appoint a plan holder specifically in the province of Ontario. The LCO undertook extensive research and consultations to understand the interests of affected individuals and organizations in the Ontario context. During our consultations, we heard personal accounts that confirmed concerns regarding the necessity that a plan holder in Ontario be an attorney or guardian appointed under the Substitute Decisions Act, 1992 (SDA) – a law that was intended for broader application to property management.
The LCO heard that adults have been unable to appoint a plan holder through a power of attorney (POA) because the threshold for capacity under the SDA that would entitle them to do so may be out of reach. Furthermore, the exigencies of applying for guardianship have been perceived as disproportionate to appointing a plan holder due to associated costs, time and possible repercussions on an adult’s well-being.
The LCO’s recommendations are intended to respond to stakeholders’ aspirations for a streamlined process that is inexpensive, user-friendly and narrowly focused on the RDSP. Chapter IV is dedicated to our recommendations. In addition to recommending a streamlined process, we address questions about how it could be implemented. We consider measures to safeguard beneficiaries against financial abuse; whether community organizations should be eligible to act as RDSP legal representatives; the role of RDSP legal representatives; and the provision of accessible information to members of the public; among other issues.
The Law Commission of Ontario recommends that the Government of Ontario implement a process that would enable adults to personally appoint an “RDSP legal representative” to open and manage funds in an RDSP, where there are concerns about their capacity to enter into an RDSP arrangement with a financial institution. The process would be available to adults who do not have an attorney or guardian for property who could act as their plan holder. It would enable adults to choose who they would like to assist them in gaining access to an important social benefit.
With respect to the criteria to grant the personal appointment, the LCO recommends they be based on the definition of legal capacity to grant a POA at common law. However, if the Government of Ontario believes that these criteria are not sufficiently flexible to improve access to the RDSP, we recommend that they be based on section 8(2) of the British Columbia Representation Agreement Act. These two thresholds for legal capacity are less stringent than the requirements to grant a POA for property under the SDA. Recognizing that Ontario’s existing threshold is unattainable for some adults with disability, we propose that this measure could improve access for adults wishing to appoint a plan holder.
As a safeguard against financial abuse, we believe that the ease with which adults would be able to personally appoint an RDSP legal representative should be offset by robust protections. Therefore, we recommend that adults be entitled to benefit from provisions under the SDA that include requiring attorneys for property to keep accounts of financial transactions and permitting members of the public to file an allegation of suspected abuse with the Office of the Public Guardian and Trustee.
In addition, we recommend that an RDSP legal representative have authority to open a plan and decide the plan terms but not to manage funds paid out of the RDSP. The ITA has embedded several protective measures for the management of funds while they are held inside the RDSP. Restricting the scope of an RDSP legal representative’s authority from extending beyond that of a plan holder would reduce the opportunities for self-dealing and mismanagement after funds have left the plan. It would also resolve unique issues that arise because of the nature of RDSP funds, which we discuss in the report.
When the time comes for beneficiaries to receive payments out of the RDSP, they would be required to manage their own funds or apply for guardianship, if they do not have legal capacity to do so themselves. In Ontario, guardians are a source of comprehensive decision-making for general property management that adults and their supporters can turn to when in need. In addition, the LCO’s larger project on Legal Capacity, Decision-Making and Guardianship considers less restrictive alternatives to guardianship that could, possibly, address challenges that RDSP beneficiaries may face in this respect.
Adults who appoint an RDSP legal representative using our suggested streamlined process could choose a relative, including a parent, spouse, common law partner or sibling; a close friend; or a community organization that is approved by a designated government agency.
Once an RDSP legal representative has been appointed, we recommend that he or she have the same duties of an attorney for property for an adult who has been found to be legally incapable under the SDA, as applicable, and be held to the same standard of care. This would require RDSP legal representatives to encourage an adult’s participation in decision-making, to the best of his or her abilities, and to consult with supportive family members and friends. They would also be fiduciaries under the law, whose responsibilities must be performed diligently, with honesty and integrity and in good faith, for the adult’s benefit.
Finally, the LCO recommends that measures be adopted to provide third parties with certainty and finality in transacting with an RDSP legal representative, including exemptions from liability where they reasonably rely on the RDSP legal representative’s instructions.
These and other specific recommendations from the Law Commission of Ontario are set out in Chapter V in one summary list. The list identifies the sections in the report where the recommendations are discussed in-depth, so that readers can easily locate further information.
The LCO Board of Governors approved this report in June 2014.