Post-secondary, 1/3, 1/3, 1/3 calculations

[rockscan]

Was it listed as an asset in your equalization?

[Challenger]

Was it listed as an asset in your equalization?

yes, nothing was hidden.

[rockscan]

No was it listed in the equalization and agreement as being owned or taken over?

[Challenger]

No was it listed in the equalization and agreement as being owned or taken over?

The NFP was discussed out of court with lawyers, which resulted in one line "party A to pay party B" $xxx,xxx and judge made an order on that.

[rockscan]

It was obviously assumed by one of you then if it wasn't specifically noted in the agreement that you will first subtract an amount from the resp opened when the child was young. In which case, if it is solely owned by your ex then it is their money to use for their share of the costs. You would have received funds transferred as per your order/agreement.

Which is a good lesson for those going through divorce. If you opened an RESP while married, have it locked in your agreement that the funds will be used for the combined parental share prior to calculating proportionate share.

[donaldD]

Let's say couple married, opened RESP in name of only one parent, with mutual child being beneficiary. Divorce happens, the equalization and final orders made, but the RESP remains in the name of that one parent.
1. When child goes to uni, would contribution from that account be considered as contribution from both parents, or from only one?
2. What if the original plan owner parent continued using same plan post separation and contributed money there?

This may be one of those cross that bridge when you come to it kind of situations. I highly recommend though that you open your own RESP and get the grant money. As my husband learned, the first to the deposit gets the annual grant portion. He got all the grant funds in his RESP and his ex got nothing in the one she opened.

It was obviously assumed by one of you then if it wasn't specifically noted in the agreement that you will first subtract an amount from the RESP opened when the child was young. In which case, if it is solely owned by your ex then it is their money to use for their share of the costs. You would have received funds transferred as per your order/agreement.

I have expect some insults or maybe even nothing. However, will post anyways.

Challenger provided a scenario not in the first post.
That first to claim every year seems horrible as it just makes people bitter if the other gets it.

Which is a good lesson for those going through divorce. If you opened an RESP while married, have it locked in your agreement that the funds will be used for the combined parental share prior to calculating proportionate share.

1) So the suggestion here is to not put the RDSP as any individuals asset.
2) Agree to equally contribute (proportionally?) to it. *this I added in.
3) Agree that those funds (contribution + grant) get applied first to the parental total share to reduce the total amount the parents owe then split the remaining.
4) In Challengers case it is all theirs. The other party can open their own RESP if they want and they can fight to claim the grant first
AND that for Challenger it is good that there is nothing else put in the agreement about the RESP as it keeps it all theirs as it was claimed as an asset

Is that correct?

[rockscan]

Challenger provided a scenario not in the first post. That first to claim every year seems horrible as it just makes people bitter if the other gets it.

Who cares if the other party is bitter, they could have done it themselves but they didn't.

1) So the suggestion here is to not put the RDSP as any individuals asset.
2) Agree to equally contribute (proportionally?) to it. *this I added in.
3) Agree that those funds (contribution + grant) get applied first to the parental total share to reduce the total amount the parents owe then split the remaining.
4) In Challengers case it is all theirs. The other party can open their own RESP if they want and they can fight to claim the grant first
AND that for Challenger it is good that there is nothing else put in the agreement about the RESP as it keeps it all theirs as it was claimed as an asset

Is that correct?

There is no suggestion. This is great financial advice. If you have the funds to open an RESP for your kids, do it as quickly as possible to get the grant funds. That RESP is now yours alone for your share. The grant funds in your RESP are yours.

The rest of your questions are confusing. You can agree to whatever you want to but the law is: grant funds come off the total. 1/3 of the cost goes to kid who uses scholarships, loans and income. The remaining two thirds is split proportionate to income and the paying parent pays the net cost of their share. If there is an RESP opened by the parties pre-divorce, they can use all or some of it to reduce the cost.

Example: tuition, books, residence, meal plan and equipment come to $20,000. Kid got $2,000 tuition grant as part of their OSAP funds. The new total is $18,000.

Kid is responsible for $6,000. The new total is $12,000.

Mom and dad opened an RESP when kid was a baby and will put $2,000 towards their share. The new total is $10,000 and is split proportionate to income.

Mom is the recipient and her share is 30%, dad is the payor and his share is 70%. Dad's share then is $7,000 but the tax benefit is $500 making dad's actual share $6,500.

Good thing for dad, he opened an RESP after the divorce and he has money put away for education costs. He takes it out of that account for his share.

[donaldD]

Good thing for dad, he opened an RESP after the divorce and he has money put away for education costs. He takes it out of that account for his share.

Challenger opened up the RESP before divorce. That RESP was in his name alone. When equalization was done it was counted for in the equalization (Challenger paid their ex cash for 1/2 of what was in the fund).

Challenger kept contributing to the same account AFTER the divorce.

1) Those funds are solely Challengers now to contribute to their portion of the education or simply take out of the RESP (grant money goes back to govt)?

2)

Which is a good lesson for those going through divorce. If you opened an RESP while married, have it locked in your agreement that the funds will be used for the combined parental share prior to calculating proportionate share.

Challenger did not do this but if they did do that it sounds like the ex would double dip into that RESP once at equalization and again go in for education costs.
So the purpose of this clause would end up hurting Challenger financially?

[rockscan]

Challenger opened up the RESP before divorce. That RESP was in his name alone. When equalization was done it was counted for in the equalization (Challenger paid their ex cash for 1/2 of what was in the fund).

Which means that RESP is solely his. His ex could have taken the money he paid her for the asset and opened her own. Either way, the RESP is now his alone for his portion of the expenses.

1) Those funds are solely Challengers now to contribute to their portion of the education or simply take out of the RESP (grant money goes back to govt)?

Yes but he doesn't have to send the grant funds back. When you withdraw from an RESP the bank asks what shares you want to withdraw—the principle or the grant funds. Always always always use the grant funds first. The reason why is that kid is taxed on those funds and since they are in school, their income is lower and they will not suffer with that taxable income.

2) Challenger did not do this but if they did do that it sounds like the ex would double dip into that RESP once at equalization and again go in for education costs. So the purpose of this clause would end up hurting Challenger financially?

No it's not double dipping. The ex was paid out for her share of the RESP. Much like being bought out of the house. She is no longer a holder of that asset. When the expenses come in, ex will have her share and Challenger will have his. She pays for her share with whatever means she has and that could be from the money she was paid for the RESP. Imagine it being a pile of cash. The account had $20,000 and he paid her half. He has $10,000 dollars and she has $10,000. Her share of the expense is $5,000 so she takes $5,000 from the pile of cash she has or elsewhere.

Double dipping would be if she got the money from the RESP and then at expense time claimed she still had a right to the RESP.

[rockscan]

A recent decision on RESP funds (July 4, 2024) from BC Supreme Court outlines how RESPs from grandparent's are considered:

https://www.canlii.org/en/bc/bcsc/do...AEUkVTUAAAAAAB

75] As for the RESP, that was established by the claimant's mother and is for the benefit of the children. No division is necessary. Presumably, if either of the children is in need of financial assistance for post-secondary education, the fund will be made available to them as a first resource before requiring a contribution from either parent.

I am convinced that courts will follow this for funds from grandparent's. Meaning the money taken from the RESP comes off the top and should be used with parent's paying a share that is left.

Again, my lesson: agree on the RESP and put it in writing of your separation agreement!