With approximately 1.5 million Canadians suffering from disabilities, most financial advisors will at some point need to consider financial planning for the disabled. Newmarket-based financial advisor and life insurance agent, John Dowson, has made it his specialty.

In 1984, Mr. Dowson’s sister died of Neurofibromatosis. The tragedy set in motion a series of events that has seen Mr. Dowson dedicate his practice to serving the needs of people with disabilities and their families.

The first event was the discovery that his niece suffered the same condition as her mother. Mr. Dowson's mother set up a will and a trust and made Mr. Dowson and his sister the trustees of the trust. Through that role, Mr. Dowson became aware of the "Henson" Trust, an absolute discretionary trust, and discovered the value of a Settlement Option, being an effective way to distribute the proceeds of a life insurance policy that is exempt from attachment. He also began working with the Community Living Association (CLA) in his home town of Newmarket, Ontario.

As a result of Mr. Dowson's insurance knowledge, he was asked by the CLA to speak at one of the organisation's seminars. His presentation was well received and for the next two years Mr. Dowson went on circuit giving seminars and working with families.

What he realised over those two years was that money was only one element of the greater puzzle. There are many other intertwined issues: What happens to the disabled child when the parent dies? Where does he or she live? How will they be supported?

Mr. Dowson saw the need to change his business model from being predominantly insurance-focused, to offering more overall planning. And rather than charging a commission, he began charging a fee for service. He now works with other financial advisors and planners to help them deal with clients affected by disability. He says the arrangement works well. Mr. Dowson usually prepares a comprehensive life plan, or "road map" as he calls it, and leaves the specific financial work for the other advisor.

The value Mr. Dowson brings to the table is his understanding of the needs and issues faced by those particular clients. One of the major oversights Mr. Dowson often finds himself highlighting is the need to ensure the clients' desires are foremost.

An example Mr. Dowson gave was a situation where he was called upon by a colleague to assist with a partner in an advertising firm who had a child with a disability. Mr. Dowson found himself in a meeting with the client's family lawyer, corporate lawyer, accountant and financial advisor. Mr. Dowson's first question was to ask the client what would happen to his disabled son if he died. "He's going to live in a private group home," he replied. "Who's going to find the home?" enquired Mr. Dowson. "My accountant," said the client. Mr. Dowson then turned his attention to the accountant to discover the accountant had no idea about group homes or where he would send the boy.

Mr. Dowson then asked the client what he actually wanted. The client realised that he wanted the boy to remain at home. "Why don't you do that?" said Mr. Dowson. "The problem was, the group home had become their plan...the accountant's plan, the financial advisor's plan and the lawyers' plan, and it wasn't the parents' plan. Nobody asked them what they wanted. And they forgot the most important person which was the one with the disability."

Four key points

As well as making sure the clients' wishes are met, Mr. Dowson has four points he says are helpful when working for people affected by disabilities. The first point is to know your government benefits, both federal and provincial. He says the Canada Revenue Agency website has some good information. Local Community Living Association offices and the Canadian Mental Health Association can also be valuable resources.

Mr. Dowson's second point is to suggest your client writes a letter of intent - a statement as to why they are doing something. While it's not a legal document it can be prove valuable as a guideline, says Mr. Dowson. "Everything they know about their child is going to die with them unless they can pass that on to other people - their favourite TV programs, the food they eat, what they wear."

The third point is to take care of the financials. Calculate how much money they currently spend on their disabled child and work out a way to ensure that can continue. It's also important if there are other children in the family to make sure the financial aspects are dealt with fairly.

Finally, Mr. Dowson says that it's important to set up appropriate will and legal trust agreements, particularly taking into consideration the tax consequences of any inheritance. Mr. Dowson has written a handbook on the issues of financial planning for people with disabilities called, Just Imagine. Copies can be purchased through his website www.life-trust.com.

Advising clients with disabilities or family members with disabilities is something many advisors will have to deal with. He says often advisors don't ask about this possibility and clients won't bring up the subject. "All you have to do is ask," he advises.

Red Bolton