Securing Your Children’s Future: The Vital Role of Estate Planning for RESPs

Registered Education Savings Plans (RESPs) are a key vehicle used by many families to secure their children’s educational future. These accounts offer a smart and tax-efficient way to save for post-secondary education. However, one aspect often overlooked as it relates to RESPs is providing for them in your estate plan.

Estate planning is not just about distributing assets; it's a comprehensive strategy that ensures your assets, including RESP savings, are handled according to your wishes if something unexpected happens.

If you want an RESP to continue after you pass away, you need to ensure a Successor Subscriber is named to cover off a situation in which you die as the sole remaining subscriber. This person would take over the plan after your death and maintain it for the benefit of your beneficiaries.

If no planning is done in relation to your RESP, and you are the sole remaining subscriber, it becomes part of the residue of your estate. Your residual beneficiaries may not be the same as the beneficiaries of your RESP. This is frequently the case where RESPs are opened by grandparents. In some instances, this may oblige your executor to collapse the RESP and distribute the plan to the residual beneficiaries of the estate. Any government contributions that have been made to the plan under the Canada Education Savings Grant would have to be returned to the Government of Canada. This is a result that very few would intend.

There are sometimes ways to save an RESP from this fate, using consents or obtaining court orders, but this will add delays and expense to the administration of your estate. With a well-crafted estate plan, you can alleviate significant stress, inconvenience and cost for your executor and loved ones, streamlining the process and ensuring your wishes for your children’s education are carried out.

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