Group Pension Plans
If you are in a company or other group pension plan, find out what will happen as a result of an ALS diagnosis.

Can you receive some of your pension before age 65, if you are disabled, and unable to work?

Will payments be made to your spouse if you are no longer alive? To be sure that you get your full entitlement, have these questions answered by someone you trust. If problems occur, you may need advice from a lawyer with experience with group pension plans.

To minimize tax on death, you may want to make sure that your spouse is the beneficiary of your pension plan; otherwise your pension plan's value will be part of your estate, and subject to probate fees.

Canada Pension Plan
Patients with ALS may qualify for a CPP disability pension. To be eligible for a Canada Pension Plan Disability Pension, you must:

Be between the ages of 18 and 66

Have contributed to the CPP for a minimum qualifying period calculated as follows:

If you have only 2 calendar years in your contributory period, you must have contributed in both of those years.

b. If you have more than two years in your contributory period, then contributions must have been made in 2 of the last 3 years, or 5 of the last 10 years of the contributory period.

When you are already receiving a Canada Pension Plan retirement benefit and become disabled between 60 and 65 years of age, you must have become disabled before, or within six months after, the effective date of your retirement pension.

Apply in writing. (Applications can be obtained from your nearest federal government office.)

A Canada Pension Plan Disability Pension is payable from the fourth month after you are deemed to have become disabled. You may receive up to a maximum of 12 months of retroactive payments. Like most pensions, your Canada Pension Plan Disability Pension is considered taxable, subject to your total income.

Things that can change eligibility for a CPP Disability Pension
Those receiving a CPP Disability Pension must notify the Canada Pension Plan of any changes that might affect their continuing eligibility for benefits. This includes:

An improvement in your medical condition

A return to full, part-time, volunteer or trial period of work

Attendance at school or university; trade or technical training

Any rehabilitation.

Disability Tax Credit
Form T2201, Revenue Canada's Disability Credit Certificate, has a section that must be completed and signed by your doctor and sent in with your income tax return.

Minimize Tax Through Income Splitting
Income splitting reduces a family's total income tax by dividing income among various family members, using up the low tax rates of family members who have little other income. This has to be done in ways that will “attribute” less income to the higher income earner(s) in the family, according to Revenue Canada, such as the following:

• Estate freezing
• Transfer property at fair market value
• Lend or gift assets to generate business income, or income on income
• Gift funds to child turning 17
• Earn capital gains for children
• Reasonable salaries (for example, person with ALS paying spouse as a caregiver is a deductible expense to the person with ALS)
• High taxpayer pays all household expenses
• Deposit child tax credits in child's bank account
• Contribute to spousal RRSP
• Assign one half of CPP benefits to spouse

And there are others. If substantial funds are involved, or even if funds are minimal, see a professional tax expert who specializes in disability issues.

Estate Freezing
The purpose of estate freezing is to minimize the taxes due on death. Assuming assets will be at a taxable level, taxes can be minimized by a financial plan that is structured so that future profits from your assets will go to someone else in a lower tax bracket, such as your children. Consider getting advice from a professional accountant regarding estate freezing.

Tax on Deemed Disposition of Assets on Death
At the date of death, Revenue Canada requires one tax return for income earned to the date during the year and to account for the tax that is applicable on all of the increased values of the deceased person's properties and other assets. There are certain tax-free “roll over” provisions for property left to a spouse, or spousal trust. Also, dividend-paying shares may incur a double tax unless appropriate action is taken. Be sure to seek advice from a professional accountant on these matters.

Probate Fees
A Certificate of Appointment of Estate Trustee With A Will validates a will. Upon issuing this certificate, the Estate Court charges a tax rate that varies from province to province. Probate fees are reduced by reducing the amount of the estate, such as making life insurance payable to a spouse instead of to the estate.

US Estate Tax
If you were born in the US and own property in the US, or own US securities registered in your name, your beneficiaries may be in for an unpleasant surprise.

Even if you have been a Canadian citizen for most of your life, when the US Internal Revenue Service learns of a person's death, they will apply an estate tax on the total estate, regardless of what countries the assets are in. Assets will then be held by the US Internal Revenue Service until this tax is paid. There are easy ways to avoid this tax. If this could happen to you, see a professional accountant who is familiar with US estate taxes.

Tax-Effective Wills
There are numerous estate planning alternatives, including naming spouse as beneficiary to all life insurance and pension plans. Also multiple testamentary trusts, an exclusive spousal trust and trustee powers to authorize actions to minimize tax are other techniques. Mentioning these plans in a will helps to ensure that your plan will be carried out according to your wishes. Bequests to a voluntary organization can also reduce estate tax. Again if substantial amounts are involved, it is probably wise to consult with a professional estate planning accountant or estate planning lawyer.