Relatives Battling Over RESP Money – Who Gets It?

by Mike Holman

We have an interesting RESP question asked by Bea – who shall henceforth be referred to as “Grandma B”.  🙂

Here is her comment:

Who supervises how the resp is spent–can a child remove all the funds and not use them for education–I am a grandmother of a family who have resp grants from me–I hold the papers in my name and know the father would love to grasp the funds on the 18th birthday–what is the protection–is there proof needed by the government that it was used for education? If the 2nd child turns 18 and the first one did not go on to school are they transferable? Appreciate your comments. Bea

Wow, I sense that RESPs are not a calm dinner table topic in that family!

Ok, let’s go through the questions:

Can a child (or beneficiary) remove funds from an RESP account?

No, they can’t.  The person who opens the RESP account (also known as the subscriber) is the only person who can authorize any payments from the account.

Can the child’s father remove money from the RESP account?

No, same reason as above.

What proof is needed that money from an RESP is used for education?

When you do a proper educational assistance payment (EAP) then you have to show proof of enrolment to the financial institution when you request a payment.  Contact the financial institution for the exact documentation they require.  You don’t have to provide receipts or prove that the money was spent on anything “educational”.

Can I transfer RESP money to a sibling?

Yes, you can.  If the older child does not use all their RESP amounts, then you can transfer to a sibling.  Keep in mind that the lifetime grant limit of $7,200 will still apply.  If you try to transfer grants which give one beneficiary more than $7,200 in grants, then the grants will be returned to the government.

You don’t need a family plan account to do the transfer.  This can be done between two individual accounts as well.

I hope this answers your questions, Grandma B!

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{ 4 comments… read them below or add one }

1 Matthew Kirkland

I’d be interested to know the back story behind this, does the father want to spend the funds on something other than the childs education? Seems silly.

2 Charles in Vancouver

She can distribute the money directly to the grandkids. Make sure their bank accounts are entirely in their own names, not co-signed. Of course there’s no control over whether the father might exert pressure to sap that money, but ultimately you have to forge your own relationship of trust with the beneficiaries.

3 Mike

@Matthew I have no idea.

@Charles. Good point.

4 AnnieA

My sister and BIL didn’t set up RESPs. They had set up bank accounts for their kids, and I gave them some money for both accounts. Within a couple of years, though, Sis and BIL had emptied their kids’ accounts for “emergencies”. I then made a couple of investments the adults couldn’t touch, and essentially Sis stopped talking to me. I am waiting for the older child to graduate, so perhaps then Sis will believe I have made the investments. No idea whether the kids will be able to afford to go to college…

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