CLT recently held a one day seminar. A question about covering burial costs for somebody on ODSP was raised. If a disabled person can only have $5,000 cash in an account, what happens if the person dies and the parents died before them? How are the costs of the funeral expenses covered?

Response: While you are not allowed to have more than $5,000 in a bank account while on ODSP, there are a number of assets and expenses that are exempt from ODSP regulations. One of those exemptions is pre-paid funeral expenses. The following is an excerpt from ODSP directives found at http://bit.ly/Ydj0eT

Summary of Directive

* A pre-paid funeral for any member of a benefit unit is not included as an asset in determining eligibility for income support.
* There is no maximum limit for a pre-paid funeral.

So, you can actually pre-pay to cover a person’s funeral expenses without upsetting their ODSP.

Alternatively, it may be possible to secure a life insurance policy where the person on ODSP is the insured – that is if they are insurable. The proceeds of a life insurance policy can be used to cover the cost of funeral expenses. Life insurance that does not have a “cash surrender value” is not considered an asset by ODSP. In other words, there are certain types of life insurance policies an ODSP recipient can hold without jeopardizing their benefits. If the policy does have cash surrender value, it may be allowed to have as much as $100,000 without upsetting ODSP – talk to an advisor or legal counsel who is familiar with ODSP directives before purchasing life insurance to make sure you don’t transgress ODSP directives.