In Ontario, Registered Disability Savings Plans (RDSPs) are generally treated as property, but government-matched grants and bonds are often heavily discounted or excluded from Net Family Property (NFP). This is because these funds must be repaid to the government if the account is collapsed. You will report your RDSP on Form 13.1, and the Superior Court of Justice filing fees for an Application total $659 CAD (or $669 CAD if including a divorce claim).
Going through a separation is difficult enough without the added stress of dividing complex financial assets. If you or your spouse holds a Registered Disability Savings Plan (RDSP), you may be wondering how this specialized account is handled under the Ontario Family Law Act. Unlike standard savings accounts, RDSPs are designed to secure the financial future of individuals with severe and prolonged disabilities. They contain a mix of personal contributions, government grants, and investment growth, making their division highly nuanced.
In Ontario, the general rule is that married couples equalize their net family property (NFP) calculated on their date of separation (valuation date). However, counting every dollar in an RDSP as a shareable asset can be incredibly unfair to the disabled spouse. This guide will walk you through the step-by-step process of handling an RDSP during a divorce in Ontario, whether you live in Toronto, Mississauga, Ottawa, or anywhere else in the province. If your situation is complex, reaching out to a local family lawyer from our directory is always a wise decision.
Step-by-Step Process for Handling RDSPs in Ontario Property Division
Properly valuing and dividing an RDSP requires careful attention to detail. Because the laws surrounding equalization in Ontario are strict, you must separate the different components of the RDSP to protect funds that truly belong to the disabled beneficiary. 📊
Step 1: Gathering Necessary Financial Documents
Your first step is to obtain clear documentation of the RDSP’s value on two critical dates: your date of marriage and your valuation date (usually the date of separation). You will need statements from the financial institution holding the RDSP, as well as documents from the Canada Revenue Agency (CRA) detailing the exact breakdown of the account. It is vital to separate the personal contributions from the Canada Disability Savings Grants (CDSG) and Canada Disability Savings Bonds (CDSB).
Step 2: Calculating Contingent Liabilities
If an RDSP is collapsed or if a withdrawal is made, the federal government requires the repayment of all grants and bonds paid into the account within the last 10 years (known as the Assistance Holdback Amount). Therefore, if you are calculating your NFP, you must not include these holdback amounts at face value. Generally, lawyers will argue for a contingent liability deduction on your financial statement, effectively lowering the asset’s value to reflect the government’s claim on those funds.
Step 3: Completing Form 13.1 Financial Statement
In Ontario, you must fully disclose all assets and debts on a Form 13.1 Financial Statement (Property and Support Claims). You will list the RDSP under the “Savings and other accounts” section. In the “Debts and other liabilities” section, you must carefully document the contingent liability (the government grants and bonds that would need to be repaid). Accuracy here is essential to ensure you do not overpay or under-receive your equalization payment.
Step 4: Negotiating a Separation Agreement or Filing at Court
Once both spouses have sworn their Form 13.1s, the next step is negotiation. Most separating couples in Ontario resolve their property division through a legally binding Separation Agreement drafted by their lawyers. If an agreement cannot be reached, you may need to file an Application at your local Superior Court of Justice. Whether you are at the courthouse in Brampton or Hamilton, the judge will look at the exact composition of the RDSP to determine a fair equalization payment.
Understanding the Components of an RDSP
| RDSP Component | How It Is Treated in Ontario Equalization |
|---|---|
| Personal Contributions | Generally included in Net Family Property. These are out-of-pocket funds deposited by the beneficiary or family. |
| Government Grants & Bonds | Usually excluded or offset as a contingent liability, as they must be repaid if the account is closed early. |
| Investment Growth | Usually included, but may be discounted depending on how much of the growth is attributed to the government grants. |
How Much Does it Cost to Divide Property in Ontario?
The costs associated with property division depend heavily on how cooperative both parties are. Here is a breakdown of what you can expect in Ontario:
- Court Filing Fees: The basic fee to file an Application at the Superior Court of Justice is $214 CAD (or $224 CAD if the application contains a divorce claim), plus another $445 CAD before the case is set down for a trial or hearing (totaling $659 CAD or $669 CAD).
- Lawyer Fees (Uncontested): If you and your spouse agree on how to handle the RDSP and just need a Separation Agreement drafted, lawyer fees generally range from $1,500 to $3,500 CAD.
- Lawyer Fees (Contested): If the division of the RDSP goes to family court, legal fees can quickly exceed $10,000 to $25,000+ CAD per person due to the time required for motions, discoveries, and trial preparations.
- Financial Professionals: Hiring a Certified Divorce Financial Analyst (CDFA) to calculate the exact contingent liabilities of the RDSP may cost an additional $1,000 to $2,500 CAD.
How Long Does the Process Take?
In Ontario, a simple property division finalized through a Separation Agreement can take anywhere from 2 to 4 months. However, if there are disputes over how to value the RDSP and you must proceed through the Superior Court of Justice, the litigation process routinely takes 1.5 to 3 years to reach a final trial. ⏳ It is highly recommended to mediate the issue to save both time and money.
Frequently Asked Questions (FAQ)
Can my spouse force me to cash out my RDSP?
Generally, no. Ontario family law requires an equalization of the value of your assets, not a division of the assets themselves. You can pay your spouse their equalization share from other sources (like home equity or cash) without actually collapsing your RDSP.
Do we share the RDSP if we are common-law?
In Ontario, common-law partners do not have an automatic statutory right to equalize property under the Family Law Act. You leave the relationship with what is in your name. However, a spouse might make an equitable trust claim, though this is difficult with an RDSP.
How do I prove the government grant portion?
You must request a detailed statement from the financial institution that manages the RDSP, or log into your CRA My Account. The documentation will clearly separate personal contributions from the Canada Disability Savings Grants (CDSG).
Does spousal support affect the RDSP?
If the disabled spouse receives RDSP withdrawals as income, it may be factored into their total income for the purposes of calculating spousal support under the Spousal Support Advisory Guidelines (SSAG).
Dividing an RDSP requires a deep understanding of both provincial family law and federal disability benefits. To ensure your financial security is protected, strongly consider reaching out to an experienced Ontario family lawyer from our directory to guide you through the process.
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