I.        Introduction

The Ontario government has requested that the Law Commission of Ontario (LCO) undertake a review of how adults with mental disabilities might be better enabled to participate in the Registered Disability Savings Plan (RDSP). The LCO Board of Governors approved this project on Capacity of Adults with Mental Disabilities and the Federal RDSP in April 2013. The Ontario government 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. 

Persons with disabilities tend to experience a lower standard of living than other Canadians due to factors such as barriers in the labour force and unmet needs for supports. The RDSP is a savings vehicle created by the federal government to assist persons with disabilities with long-term financial security. Financial institutions offer RDSPs to eligible members of the public. Beneficiaries and their family and friends can make private contributions to an RDSP. Beneficiaries can also receive government grants to match contributions and those with a low income may be eligible for government bonds.  

The RDSP has distinctive policy objectives that include poverty alleviation, encouraging self-sufficiency and promoting the active involvement of persons with disabilities in making decisions that affect them. Under the Income Tax Act (ITA), adults can establish an RDSP for themselves and decide the plan terms as the “plan holder”. The ITA provides that where an adult is not “contractually competent to enter into a disability savings plan” with a financial institution, another “qualifying person” must act as a plan holder on his or her behalf. 

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 has diminished capacity and wish to appoint a qualifying person before approaching a financial institution. 

However, adults and their families have expressed concerns to the federal government with respect to provincial and territorial laws that govern how a qualifying person can be appointed. Many of these laws require that an adult be declared legally incapable and receive assistance from a guardian. This process can be expensive, time consuming and have significant repercussions for an adult’s well-being. In Ontario, qualifying persons include guardians and attorneys for property, who can be appointed under the Substitute Decisions Act, 1992 (SDA). 

The Government of Ontario has recognized these concerns and has requested that the LCO undertake a review of how adults with mental disabilities might be better enabled to participate in the RDSP. The LCO’s project will recommend a process to establish a legal representative for RDSP beneficiaries that creates a streamlined alternative to Ontario’s current framework. 

The purpose of this discussion paper is to synthesize the results of our preliminary research and consultations, and to identify several options for reform. Responses that we receive to this discussion paper will be considered for a Final Report with detailed recommendations. 

The discussion paper identifies nine options for reform. The options draw on our review of Ontario’s framework under the SDA as well as other laws in Canada and abroad. They incorporate elements of existing laws that could meet evaluative criteria – or benchmarks – that the LCO has developed. We propose that an effective alternative process for Ontario would meet the following benchmarks:  

  1. Responds to Individual Needs for RDSP Decision-Making
  2. Promotes Meaningful Inclusion in the Decision-Making Process
  3. Ensures that Necessary Protections for RDSP Beneficiaries are in Place
  4. Achieves Administrative Feasibility, Cost-Effectiveness and Ease of Use
  5. Provides Certainty to Legal Representatives and Third Parties

The options for reform are summarized further below in the Executive Summary. In total, we have proposed nine options that could be administered through the following overall types of processes to appoint a legal representative. We welcome comments on these types of appointment processes and the specific options for reform.

The options for reform in this discussion paper are a tailored response to the specific context of the RDSP. The LCO has reserved more comprehensive analysis of Ontario’s decision-making laws to its ongoing, multi-year project on Legal Capacity, Decision-Making and Guardianship. Our project concerning the RDSP is being delivered separately, on a priority basis, and it should not be construed as precluding any options in our larger project. For more information on the LCO’s project on Legal Capacity, Decision-Making and Guardianship, please visit the LCO’s website at www.lco-cdo.org.

 

II.      Accessing the RDSP and Issues of Capacity for Ontarians with Mental Disabilities

Chapter II provides an overview of the RDSP and explains the importance of capacity when adults seek to access it. The first section in the chapter reviews contextual information on the RDSP that is relevant to the LCO’s project (Section A, Understanding the Federal RDSP). All persons who are entitled to the Disability Tax Credit (DTC) are eligible to become an RDSP beneficiary, if they are age 59 or under and resident in Canada when the RDSP is opened. RDSP beneficiaries come from diverse circumstances and they include persons with developmental, psychosocial and cognitive disabilities in all age groups. 

The second section of Chapter II presents basic concepts and tensions that are relevant to defining capacity (Section B, The Importance of Capacity When Adults Seek to Access the RDSP). As mentioned above, opening an RDSP requires a plan holder to enter into a contract with a financial institution. Where an adult beneficiary is not “contractually competent to enter into a disability savings plan”, the ITA allows a qualifying person to be the plan holder. Qualifying persons can be a guardian or other person “who is legally authorized to act on behalf of the beneficiary”. Should Ontario create a new process to appoint a legal representative for RDSP beneficiaries, he or she would likely need to be accepted by the federal government as “legally authorized” under provincial law, consistent with the language of the ITA.

Definitions of capacity vary across issue area and jurisdiction. In many jurisdictions, all human beings are presumed to be capable and are entitled to make decisions for themselves, unless it is believed that they are in need of protection. Although Ontario does not recognize “supported decision-making” formally in legislation as some jurisdictions do (see page xvi below), it has acknowledged that decision-making is a social and contextual activity, and that an adult’s capacity can be strengthened with services and supports. 

An adult may have the capacity to make decisions relating to daily purchases but not, for instance, investing in a mutual fund. This is because capacity is specific to the issue at hand and it can fluctuate over time. There are various methods to determine if an adult has sufficient capacity to make a decision. The predominant method is the so-called “cognitive approach”, which focuses on assessing a person’s process of reasoning in coming to a particular decision. Another method that is accepted in some Canadian provinces is to consider non-cognitive factors, such as an adult’s ability to communicate wishes and preferences. This method reflects an express social policy objective to accommodate adults with significant mental disabilities who may have different ways of reaching and expressing their choices. 

There are serious repercussions that result from a finding of incapacity, including restrictions on autonomy as well as stigma associated with the label of incapacity. Where a guardian is established through an external appointment process, such as a court proceeding, an adult may be found to be incapable of managing property. In Ontario, adults can personally appoint an attorney to act on their behalves without being found incapable, as long as they meet a standard for capacity to do so. In addition, certain external appoints do not require a finding of incapacity. For instance, an authorized person may be appointed where an adult has a demonstrated need for assistance in managing his or her finances. 

Decision-making for the RDSP continues to be important throughout the RDSP life cycle. Depending on the RDSP plan terms, a plan holder may have authority to open the RDSP; authorize contributions; apply for government grants and bonds; decide terms for the investment of savings; and decide the availability, timing and amount of certain payments. 

Plan holders do not automatically have authority to assist beneficiaries with all areas of RDSP decision-making. In particular, they are not authorized to assist a beneficiary in managing funds that have been paid out of the RDSP. The LCO heard in our preliminary consultations that some beneficiaries may also have a need for assistance with spending funds paid out of the RDSP. One issue that is addressed in this project is whether a legal representative’s scope of authority should be restricted to that of a full or partial plan holder, or extended beyond that of a plan holder to include managing RDSP payments made to the beneficiary. 

 

III.    Ontario’s Current Framework to Establish a Legal Representative for RDSP Beneficiaries

The SDA governs the establishment of general substitute decision-makers for property management, including through the execution of a power of attorney (POA) or the appointment of a guardian. Chapter III summarizes the SDA provisions that can be used to establish a legal representative for RDSP beneficiaries, although they are intended for broader application. 

Under the SDA, an adult can execute a POA to appoint a person as a legal representative for the RDSP. The definition of capacity to grant a POA in Ontario is more stringent than in many other Canadian provinces. It is premised on a highly detailed, cognitive approach. If an adult does not have a valid POA and is not capable of granting one, a guardian can be appointed through court-based and statutory processes for an adult who is found to be incapable. 

The LCO has received information on common challenges for ben