3 options for RESPs in divorce

If the beneficiary doesn’t use some or all of the money in the RESP, you can transfer up to $50,000 of your own contributions and the investment growth to your RRSP if:

• All beneficiaries named in the plan have reached age 21 (so have presumably decided they won’t attend post-secondary school)
• You’ve owned the plan for at least 10 years
• You have contribution room in your RRSP

If the beneficiary doesn’t attend post-secondary school or you shut down the plan early, you must repay any Canada Education Savings Grants (CESG) or Canada Learning Bonds that have been credited to the RESP.

How RESPs factor in divorce 

While the money in an RESP is commonly treated as being meant for the beneficiary child or children, it legally belongs to the subscriber. This means the eventual call on what happens to the money in an RESP comes down to the subscriber. Of course, if the account has joint subscribers, both would have eventual say on how the RESP is treated. 

Generally, RESPs are not treated as divisible property in divorce. The Income Tax Act specifies that RESPs are not required to be divided between the parties. Parents also typically regard these plans as non-matrimonial property and will usually agree not to divide it. 

But again, how you choose to deal with the RESP, especially if it is a joint account, comes down to the both of you. Some of the ways that RESPs can be treated during separation or divorce include: 

• Equalization: The RESP may be considered as a marital asset for equalization or division purposes. This means the parties may split it as part of the divorce or separation proceedings. But keep in mind that it comes down to what the both of you agree. There’s no requirement that you must do this. 
• Joint contributions: As mentioned earlier, most parents typically treat RESPs as assets for their children and choose to leave them untouched. If you were both contributing to the RESP before divorce or separation, you can continue to do so. But, you cannot open a joint subscriber account after divorce. Another thing you should keep in mind, if you do choose this option is an RESP is not protected from creditors. So, if either spouse should file for bankruptcy, some part or even all of the value of the plan could be at stake. 
• Equal split: You can choose to split the RESP down the middle at the time of separation, then continue separate RESPs for the children. There will be no penalty for such transfer so long as the beneficiary under both plans is the same or the plans have siblings in common and the receiving plan allows for more than one beneficiary. 
• Section 7 expenses: Parents may also choose to put the RESP towards extra-ordinary expenses for child support. Post-secondary education is already regarded as part of extra-ordinary expenses in any case. 

However you choose to treat your RESP, the bottom-line is it boils down to what you and the other parent agree in your separation agreement. With the help of a professional mediator, both parties can work out a mutually beneficial arrangement that caters to all interests. 

No matter what you decide to do however, it is best practice to ensure everything is backed by full financial disclosure. Both parties should proceed on a complete set of facts that clearly show how much each has contributed and whatever inequalities that exist between the parties. For full financial disclosure, it will usually be necessary to provide a statement of your RESP balance.

RESP financial disclosures help both parties understand how much each has contributed to the RESP and will be an important touchstone for making future arrangements. Since the plan is ultimately controlled by the subscribers, who may end up benefiting from it, the parties will want to avoid any ill feelings stemming from markedly unequal contributions.

Your RESP statement will be used to substantiate certain sections of your financial statement when preparing a separation agreement. These include the Bank Accounts, Savings, Securities and Pensions sections. The statement will summarize your investment holdings and transactions over the reported period.

The statement is typically sent to subscribers on a quarterly basis, usually in March, June, September and December. If you have not received your statement for the period, you may need to conduct inquiries.

In order to collect your RESP statement, you may need to contact your RESP promoter to locate your plan. Some of the areas where you may be able to locate this include your bank, investment advisor, financial planner, program sponsor, banking web portal or your files.
There are different ways through which you may obtain your RESP account statement to fulfil financial disclosure requirements. These include:

Mail:

Most promoters will send your RESP statement by mail. The paper statement will contain all the information relevant to your plan, including the balance, transaction history and how much interest you have earned.

E-statement:

Some institutions will send the statement directly to your email if you have indicated that this method is preferable for you. There will be no difference between the statement you receive through this method and the paper statement sent to your physical mail.

Online:

You may also be able to access the statement online, via a web portal provided by the institution. Visit the institution’s website and follow instructions to view your statement.

In person:

If no other options are available, or if you prefer, you can visit the institution’s physical offices to request your statement in person. You will need to provide ID proof of your account ownership though.

You can collect and maintain a digital copy of the statement so it can be easily sent to the other party, your lawyer or for your own storage if you desire. The statement will be solely yours if you were the sole subscriber to the account. But if it was a joint account, then it will be a joint document for you and the other parent.