What Happens to an RESP When You Die?

An RESP can be an important part of planning for a child’s future, but what happens to it when you die is not always straightforward.

One of the most important things to understand is the difference between the subscriber and the beneficiary.

The subscriber is the person who opens and contributes to the RESP. The beneficiary is the child or young person for whom the money is being saved. The beneficiary does not own the RESP simply because they are named on it.

This means an RESP is treated differently from some other registered accounts, such as an RRSP or TFSA, where a named beneficiary can generally receive the account directly.

Who is the subscriber?

The first step is to find out exactly who the subscriber or subscribers are on your RESP.

If you are separated or divorced and are both legal parents of the beneficiary, you can have a joint RESP. CRA confirms that former spouses or common-law partners who are both legal parents can be joint subscribers.

If there is only one subscriber, it is particularly important to make a plan for what will happen to the RESP if that person dies.

What happens after death?

The RESP does not simply become the property of the child who is named as beneficiary. Instead, someone needs to take over the subscriber’s rights so that the plan can continue.

CRA allows another person, including the deceased subscriber’s estate, to acquire the subscriber’s rights after death. What happens in practice can depend on the terms of the RESP contract and provincial law.

For this reason, it is worth talking to your financial institution and your lawyer or notary before a death occurs. Ask whether your RESP permits a successor subscriber and what needs to be included in your Will.

A checklist

If you have an RESP, consider:

• Find out who the subscriber is. Don’t assume that the child named on the account owns it.

• If there are joint subscribers, understand what happens if one dies. Ask the RESP provider to explain the specific terms of your plan.

• If you are the sole subscriber, talk to your lawyer or notary about your Will and successor arrangements.

• Make sure your executor knows the RESP exists and knows where to find the account information.

• Don’t assume the RESP will automatically pass to the beneficiary. Check the arrangements while you are still able to make changes.

An RESP is intended to help a young person with their education. Taking a few minutes to understand what happens to it after your death can help ensure that the savings—and any government grants and investment earnings that remain in the plan—can continue to serve that purpose.

This article is for general information only. RESP rules can be complicated, and the terms of individual plans vary. For advice about your particular situation, speak with your RESP provider and a lawyer or notary familiar with estate planning.