All About Estates

Have You Considered Your RESP in Your Estate Plan?

This Blog was written by: Alicia Godin, Estate and Trust Consultant, Scotiatrust

A Registered Education Savings Plan (an “RESP”), is a type of tax deferred savings plan that parents, grandparents and other adults can open to save for the cost of a beneficiary’s post-secondary education. The beneficiary of an RESP is often a child or grandchild. I have recently had a number of questions about what happens to an RESP when the subscriber passes away, and what to do to prepare for this eventuality.

The person who opens and owns an RESP is called a subscriber. You may be the sole subscriber, or you may be a joint subscriber with your spouse or common law partner. If there are joint subscribers, the account will pass to the surviving subscriber on your death, and will not be subject to probate in Ontario.[1]

If you are the sole subscriber of an RESP and you pass away without appointing a successor subscriber, the RESP will become part of your estate. You may designate a successor subscriber in your Will, or your executor may designate someone as a replacement subscriber, if permitted by the RESP contract.

If you are the sole subscriber of an RESP, when planning for how that RESP is to be dealt with after your death, you should consider if you would like to:

  1. continue the plan for the benefit of the intended beneficiary(ies); or
  2. wind up the plan and have the contributions returned to your estate or distributed to the intended or other beneficiaries.

To ensure that your RESP is dealt with in accordance with your wishes after your death, you can include a clause in your Will to name a successor subscriber and provide direction to that individual. If you choose to continue the plan, the RESP account would be carried on by your successor subscriber after your death for the benefit of the beneficiary. You may also wish to consider such stipulations as to:

  • whether the successor subscriber may use funds from the estate to make contributions to the RESP after your death;
  • when the RESP account may be collapsed or closed; and
  • how the funds are to be distributed in the event that the intended child does not attend post-secondary education.

Should you wish to continue the RESP after your death, consideration should also be given to: providing future funding to do so, investment guidance, the intended beneficiaries and any permitted changes to beneficiaries, as well as the limits or terms under which contributions can be withdrawn.

In the alternative, if you choose to have the plan wound up it is important to keep in mind that it may be necessary to repay any matched government contributions such as Canada Education Savings Grants and Canada Learning Grants.

[1] This does not apply to Quebec residents.

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