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Navigating RESPs in Your Estate Plan: A Guide For Families in British Columbia

    Incorporating RESPs into your estate plan ensures your educational goals for your beneficiaries are aligned with legal standards

    Introduction

    Registered Education Savings Plans (RESPs) are vital for families in British Columbia aiming to secure their children’s educational future. Proper integration of RESPs into your estate planning is crucial to fulfilling your educational objectives, even after your passing.

    The Nature of RESPs

    Contrary to popular belief, an RESP isn’t a trust but a contractual relationship between the subscriber (the individual who sets up and contributes to the RESP) and the promoter (the financial institution). For jointly held RESPs, often used by parents for their children, rights pass to the surviving subscriber upon the death of one. The RESP becomes part of the estate upon the death of the last subscriber.

    Legal Requirements and Challenges

    In BC, including RESPs in estate planning, adherence to specific legal frameworks is required. A key challenge is the dynamic nature of educational expenses and the necessity of updating your will to reflect these changes. Selecting a reliable and financially responsible successor subscriber is essential for effective RESP management.

    Protecting Contributions and Grants

    Your will should clearly outline the handling of RESP contributions posthumously, ensuring that these funds are dedicated to educational purposes. British Columbia RESPs are also eligible for substantial government grants, including the Canada Education Savings Grant (CESG) and the British Columbia Training and Education Savings Grant (BCTESG). These grants are crucial in enhancing educational funding and should be a key consideration in your estate planning.

    Estate Planning Strategies of RESP

    1. Review RESP Contract: It’s essential to consult with an estate planning lawyer to understand the rights of the subscriber’s Executor after death.
    2. Managing RESP Funds: Decide how the RESP should be administered and distributed when you have died.
    3. Successor Subscriber: Designating an appropriate successor can ensure that the RESP is managed according to your wishes.
    4. Detailed Planning Considerations: Address various scenarios like the continuation of the plan for beneficiaries, winding up the plan, and the handling of contributions.
    5. Distribution of RESP Assets: Plan for scenarios where beneficiaries fail to qualify and provide directions for the distribution or collapse of the RESP.

    Conclusion

    Effectively incorporating RESPs into your estate plan requires a nuanced and careful approach. At Ratcliff, our experienced wills and estates lawyers are dedicated to guiding you through this process, ensuring your educational goals for your beneficiaries are aligned with British Columbia’s legal standards.

    Peter Bonny
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