Account Holders and Representation Agreements

(British Columbia only – because Representation Agreements are available only in BC, this post is only for BC residents.  Read about our collaboration with PLAN, CACL and others to improve the situation in the rest of Canada.)

Who can and should be the Account Holder now and in the future is a question that families must answer whether you are opening a plan on behalf of a child or an adult or assisting an adult to open a plan. Seniors who are planning to open up a retirement account should consider to check out the benefits of https://www.sofi.com/learn/content/ira-vs-401k-which-is-best-for-you/. This way after retiring, the seniors won’t have any trouble with money plannings.

When it comes time to sit down with the forms to open an Registered Disability Savings Plan you will need to identify people in two roles: the Beneficiary and the Account Holder.  The Beneficiary is pretty simple; it MUST be the person for whom the RDSP is meant to benefit, the person who has established eligibility for the disability tax credit.  The Account Holder is the person who authorizes contributions, makes investment decisions and, in most situations, makes decisions about withdrawals.

Our overview of this matter is available here.

Decision Tree

Here’s a decision tree to assist you in figuring out how to proceed:

Is the RDSP for a child (will NOT have reached the age of 18 by the end of the calendar year) or an adult (18 or older in the current calendar year)?

Child:  Are you the legal parent or legal guardian?

Either parent may be the legal parent, excepting in the case of a separation or divorce where one parent may be named as the legal parent.

A legal guardian may be in place via an appointment through a Will or via a court appointment in a number of circumstances.  Where children are in care under permanent custody orders, the Public Guardian and Trustee will act as Account Holder.

Adult:  Is the adult able to fulfill the responsibilities of Account Holder independently?

Independently: An adult may want to act independently as Account Holder or they may want to have a joint Holder in the event that they are not able to act temporarily or permanently.  If this the latter is the case, they have a choice of legally authorizing another person with a Power of Attorney, Enduring Power of Attorney or a Representation Agreement.

Best personal planning practices recommend that all of us prepare for a time when we might not be able to act for ourselves.  Speak to your Will and estate planning lawyer about Powers of Attorney or connect with Nidus Personal Planning Resource Centre for assistance with a Representation Agreement.  (You do not have to engage a lawyer to execute a Representation Agreement.)

With Support:  If an adult is not able to understand the implications of investment decisions and manage their financial affairs independently, a visit to a lawyer would probably result in the lawyer indicating that they probably don’t have the capacity to execute a Power of Attorney.  If this is the case, you have two options for proceeding:

1. Make a Representation Agreement:  These planning tools are available only in BC at this point.  An easy way to think about them is that they are tools, authorized by the Representation Agreement Act, that allow people to appoint one or more people to support them in decision making or to act on their behalf on certain legal matters and on routine management of financial affairs.

Until the contrary is demonstrated, every adult is presumed to be capable of making a Representation Agreement.  The Act is specific that an adult can make a Representation Agreement even if they are incapable of:

(a) making a contract,

(b) managing his or her health care, personal care or legal matters, or

(c) the routine management of his or her financial affairs (from the Representation Agreement Act.)

Furthermore, in determining whether an adult is incapable, all relevant factors must be considered, including whether the adult demonstrates choices and preferences, expresses approval or disapproval of others and has a trusting relationship with the representative.

The community has interpreted this to mean that no matter the capacity of an adult, the presence of a trusting relationship means that they can do a Representation Agreement.

To get more information about Representation Agreements, to get forms or assistance in making one, contact the  Nidus Personal Planning Resource Centre.

2. Get a Committeeship Order:  Most of us recognize the term “guardian” but not the term “committee”.  In BC guardianship only applies to children.  Once a person becomes an adult, it is possible to them to be deemed incapable and for a Committee (adult guardian) to be appointed.  This is an expensive process that involves, lawyers, specialized testing to determine capacity, and courts.  Generally, it’s not a process that most advocates would recommend.

PLAN’s book, Safe and Secure, which is available at most London Drugs (ask at the pharmacy), also has a good chapter on this.

Thinking Ahead

Whether you support a family member that is a child or an adult, it is wise to think ahead.

RDSPs opened by parents for children: If you have opened an RDSP for your child, as the parent, you can continue to act as the Account Holder once they become an adult.  Alternatively, you can act as co-Account Holder with them or you can pass on the responsibility of Account Holder on to them.  This can all be done at the financial institution by completing the appropriate forms.

RDSPs opened by guardians for children:  If you have opened an RDSP for a child for whom you are the guardian, you can NOT continue to act as the Account Holder once they become adults.  In this instance, you can pass the responsibility on to them or if that’s not appropriate, they will need to make a Representation Agreement naming you or another person to assist them or act on their behalf, or you will need to apply for a Committeeship Order.

If you are an Account Holder for the RDSP of an adult, you need to plan for your replacement.

Parents:  If you are Account Holder of your adult son or daughter’s RDSP, you need to think about who will act if you cannot.  Is it your son or daughter, themselves, or your son or daughter with support or another person?  If it will be another person, then you need to have your son or daughter do a Representation Agreement to appoint them.   With a Rep Agreement, it is possible to name more than one Representative and to name alternate Representatives.    They are designed to be good, flexible future planning tools.

Representatives:  If you are an Account Holder that is authorized by a Representation Agreement, there may already be co- or alternate Representatives.  If not the Beneficiary of the RDSP needs to redo the Agreement to name either more than one Representative or to name alternates.

Committees:  If you are an Account Holder that is authorized by a Committeeship Order, there may be more than one Committee named.  If there is not, you will need to speak to your lawyer about going back to court to have joint or alternate Committees names.  The cost involved in this is one of the disadvantages of a Committeeship Order; every time you want to make a change there are significant costs involved.