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RESP Contribution Question

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  • RESP Contribution Question

    Hi there,

    I am looking for some clarity in understanding how RESP + Govt Grant come into play when dividing child post-secondary expenses.

    I am the ONLY contributing parent and my child has $2500 in grant money in his RRSP.

    Let's say we agree to share 50/50 post secondary costs. Let's say, my son has $12,500 in his RESP (incl $2,500 grant money). We need to come up with $20,000.

    I am trying to understand how we split this $20,000 where 1 parent already contributed $10,000 into RESP over the years to take advantage of $2,500 in grant money.

    There are 2 options that I heard of:

    Options A: $20,000 - $2,500 (grand amount) x 50%, where the contributing parent can put his $10,000 in RESP contribution against his share

    Option 2: $20,000 - $12,500 (full RESP amount) x 50%, in this case the contributing parent has paid significantly more than his fair share, but where the full RESP is considered to be my sons.

    If you can help me out to figure this out, that will be greatly appreciated!

    Thank you!

  • #2
    I don't think that I have ever heard a hard a fast rule about how this should be dealt with - RESP's are a relatively new thing - and it is logical that whatever the parents can agree upon is what should be done.

    If I understand this correctly, you set up and contributed 10,000 towards an RESP for your son. Your ex did not contribute anything.

    Forget the governments' contribution - consider that your son's contribution - if he didn't go to University or College - that amount would have to be paid back - you would not be able to keep it - it would be gone.

    So -

    you need 20,000 - and your son contributes his 2,500 (grant accumulated) so that leaves you with 17,500 divided 50/50 is 8,750 to be paid by each parent. So, I would think a reasonable solution is to ask your ex to pay 8,750 towards the 20,000 and the balance from the RESP - being 8,750 as coming from the principal you contributed and 2,500 from the amount the government contributed.

    Sound fair?


    • #3
      Someone please correct me if I'm wrong, but I believe the split is generally considered to be 1/3 with each person responsible for that amount. How you make up that amount is up to you.

      If the total cost is 30K each person pays 10K, parent A has done so through RESP contributions, parent B pays 10K however they choose and same with child, through earnings, grants or student loans. Each assumes a third of the cost


      • #4
        I think that the 1/3 is a "generally" thing. If 2 parents agree to do it 50/50 so that the child can use any money they earn for the extra's like books, entertainment, transportation etc. then that's OK too.

        But, I think what we are both saying is that you should consider the 2,500 a grant and attributable to the child as his contribution, and the balance split in whatever way the parents agree upon - 1/3 each or 50/50.

        Now - the income that was earned on the 10,000 and the 2,500 that has accumulated in the RESP account - what do you do with that?


        • #5
          I though post secondary was considered a section 7 expense and split proportionate to respective incomes...

          1/3 x 3 would be nice, but some kids don't have savings like that... and 50/50 would be reasonable, unless Parent #1 makes $$$$ and Parent #2 makes $$.


          • #6
            Did you make your contributions while you were married?

            If yes, then I think each parent would consider 1/2 of the RESP towards their share of the grand total.

            If no, then YOU would consider the whole RESP towards YOUR share of the grand total.

            The rationale being that RESP is considered as savings towards a common goal/property (like an RRSP), and if married, then that is split 50-50 when you split.

            This is based on a few cases I found in CANLII.

            Not sure about the grant money - seems reasonable to consider that as the kid's contribution.

            Have a search in CANLII for RESP.
            Last edited by dinkyface; 01-31-2011, 08:39 PM.


            • #7
              You have asked a great question.

              All that 1/3 child, 1/3 mom, 1/3 dad talk is a guideline starting point for CS purposes to determine which party is responsible for which portion of the post-secondary education section 7 expenses.

              Once you carve that out, then each party's responsibility is handled pursuant to the arrangement made in by agreement or in court. How each party pays is really not relevant vis a vis the RESP except when it is a jointly owned (by the parents) plan.

              If the RESP is jointly owned, as in when mom and dad bought it together, then the value when the kid goes to school is split and withdrawals from that plan would be considered as equal contributions by each parent.*

              If the RESP is owned by one of the parents it would be that parent's property and withdrawals from that plan to pay for the child's tuition would be on account of that parents contribution for section 7 purposes.

              *In our final order it provided that contributions to our joint plan after divorce would be considered pro rata until the children go to school for purposes of who got credited for contributions to school upon withdrawal. I didn't care for that at all and wanted to be separate from my ex and so we negotiated whereby I bought her out. Like Mess says, get out of bed financially (too).


              • #8
                Edit out!!
                Last edited by dadtotheend; 01-31-2011, 09:45 PM.


                • #9
                  I suddenly feel much better that I'm not the only one who occassionally posts to the wrong thread - thanks DTTE!


                  • #10


                    • #11
                      Completely unrelated the the original post....

                      Blink... I LOVE your profile pic!! Too funny!!


                      • #12




                        • #13
                          Nobody likes my new pic


                          • #14
                            LOL @ RS & DTTE!

                            And Mess, I meant to comment the other day and it must have slipped my mind. I immediately thought of the 'how to catch an elephant joke'! Love it!


                            • #15
                              Awe Mess... I love your new pic too!!


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