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  • RESP and Children's Expenses

    Hi all, two questions for the forum today. Backgroud EX and I are separated but no formal separation agreement yet. She lives in the matrimonial home with very little expenses and flush with disposable income. I moved into a new home with a hefty mortgage and very little disposable income after child support. I pay her $740 a month in CS. We split section 7 - 60% me and 40% her. We have shared custody.

    1. Children's RESP - her proposal is as follows. She has lots of disposable income and proposes that she contribute now and I have to make up my 60% in the future when I can. So basically if she puts in $4000 I owe $6000.

    I don't think this is fair - I can afford maybe $100 a month / $1,200 a year. What she is proposing forces a liability upon me - great she can afford $4000 this year but then she marks in her spreadsheet that I owe $6000 - I can't afford to match her contributions. Any thoughts on this?

    Won't get into the logistics of setting up two separate sets of RESP accounts, grant allocation, etc at this point.

    2. The kids of lunch programs at school, pizza day, etc. She expects if the kids have pizza day that costs $10 that I pay $6 and she pay $4 - the same as section 7.

    I believe that a) my Child Support equilizes income and therefore these should be split 50 / 50.
    b) these are not section 7 - it's nice that the kids have pizza day but it's not mandatory - I could make them lunches just as easily like I do on none pizza days. Again any thoughts from the forum on this?

    Thanks in advance.

  • #2
    Tell her to open her own RESP.

    Her contributions count as her money
    The grant money counts as the kids money
    Any growth is her money

    You open your own RESP
    Your contributions are your own money
    The grant money counts as the kids money
    Any growth is your money.

    When university comes you pay your proportionate costs. She pays hers. How each of you pay it or where the money comes from is not important.

    As for the pizza.... My ex and I each pay 50% of it, although it's always on a Tuesday and I never make a lunch on a Tuesday so it doesn't save me anything. But for me the money is not an issue so I pay.

    The kids also have a milk program. $12.00 / kid per month. I pay for my son she's pays for my daughter.

    CS covers lunches therefore it should not be proportional...IMO anyway.
    Last edited by FB_; 11-19-2013, 03:51 PM.

    Comment


    • #3
      Originally posted by Dee1973 View Post
      ...Backgroud EX and I are separated but no formal separation agreement yet...
      You should work on this. Best to have an agreement in place.

      Originally posted by Dee1973 View Post
      She lives in the matrimonial home with very little expenses and flush with disposable income. I moved into a new home with a hefty mortgage and very little disposable income after child support. I pay her $740 a month in CS. We split section 7 - 60% me and 40% her. We have shared custody.
      This part of your post, confused me.

      If she lives in the matrimonial home, how does she have very little expenses? Is there not a mortgage on that home as well, still? Who is paying that? Utilities, etc. You have moved out. You should research "occupational rent", and see if it applies in your situation. There are others more knowledgable about that, on here.

      I assume the $740 a month child support, is "offset support" already? You should be paying offset support, with shared custody.

      Originally posted by Dee1973 View Post
      Children's RESP...
      Won't get into the logistics of setting up two separate sets of RESP accounts, grant allocation, etc at this point...
      Originally posted by FB_ View Post
      Tell her to open her own RESP.
      Her contributions count as her money
      The grant money counts as the kids money
      Any growth is her money

      You open your own RESP
      Your contributions are your own money
      The grant money counts as the kids money
      Any growth is your money.

      When university comes you pay your proportionate costs.
      FB offers good advice.
      You are seperating. Nothing wrong with seperate RESP accounts. It will save you headache. You are free to save for your child's education, in any way you wish. A RESP is *one* way to save.

      Comment


      • #4
        Originally posted by Dee1973 View Post
        ...
        1. Children's RESP...
        ...Won't get into the logistics of setting up two separate sets of RESP accounts, grant allocation, etc at this point....
        FYI, to add to this.

        There is really nothing very complicated about this, if you have seperate RESPs. The normal CESG (Canada education savings grants, 20%), go to the kid, and they will follow contributions (to whichever account). The CESG program has rules about that, and they apply those rules. You won't even have to worry about them. I doubt, given your situation, you qualify for the Canada Learning Bond, or the "additional CESG grants" for lower incomes".

        The only thing you will have to worry about, is overcontributing to the RESPs, and you can easily account for that, since *you both* should be exchanging your tax returns/NOAs for each year, going forward. Get that into your agreement. The RESPs are a valid point, to require that even more.

        FYI, in case your child ends up not going to a qualified post-secondary school/program... do you really want your RESP contributions in a "joint RESP" account, that your ex could collapse if they wished?

        Comment


        • #5
          You can also get the current RESP split 50/50

          Although I've sent the paperwork in it's yet to be completed.

          Comment


          • #6
            A couple of thoughts:

            1) The pizza day stuff is nonsense. That's what child support is meant to cover. S7 expenses are meant to be extraordinary, i.e. something which the parent could not reasonably be expected to afford with his/her own financial resources, including both income and any child support they receive. If you're getting pizza lunch hassles now, be sure that when you do the formal separation agreement, you SPELL OUT what will or will not count as S7 (e.g. extracurricular expenses above a certain amount per year - everyone's situation is different). Ambiguity about S7 is a major headache. Trust me as one who has had to deal with S7 claims for a Halloween costume, among other things.

            2) There's nothing wrong with having two RESPs. My D8 has two. I contribute $100/month to mine, ex contributes $50/month to his. You will be responsible for your share of postsecondary education expenses at the time the expenses are incurred, not right now. Creating an RESP is just a good way of ensuring that when your kid does go to postsecondary, you will have the money ready at hand and don't have remortgage the house. You don't need to reach agreement with your ex about how you manage your own savings for your child's education.

            Comment


            • #7
              Originally posted by Dee1973 View Post
              ...
              I don't think this is fair - I can afford maybe $100 a month / $1,200 a year. What she is proposing forces a liability upon me - great she can afford $4000 this year but then she marks in her spreadsheet that I owe $6000 - I can't afford to match her contributions. Any thoughts on this?
              You don't have to worry about post-secondary school (a section 7 expense), until the time that expense comes up. Has it come up? Likely not, since you are still saving for it. You are in no way obligated, to match your ex's contributions, each year. You can come up with your "share", when the expense comes up.

              It would be prudent though, to save for it, each year, in the means you are able to.

              Okay. I'm done responding now. :-)

              Comment


              • #8
                FB_ - what you are proposing makes total sense but what I have heard is that CRA won't pay the grant into two separate plans for the same child? Or in some cases one party may get the entire amount of the grant for any particular year?

                dad2bandm - we have no mortgage and awaiting the sale of the home. I have looked up occupational rent and really needs to be order by the judge as part of exclusive possession order. Otherwise good luck collecting unless the occupying party tries to get you to pay for 50% of property tax, home insurance or mortgage. She will never do this because obviously no mortgage.

                Comment


                • #9
                  Originally posted by Dee1973 View Post
                  FB_ - what you are proposing makes total sense but what I have heard is that CRA won't pay the grant into two separate plans for the same child? Or in some cases one party may get the entire amount of the grant for any particular year?...
                  Does it matter? The grant is for the child, and counts towards the child's "contribution" towards their post-secondary expense. I guess you could have one subscriber that makes horrible investment decisions, wiping out the CESG grants, and another that is better at investment decisions? Really, this shouldn't be an issue.

                  The rules for the RESP providers (the banks, mutual funds, etc) that they follow in regards to the CESG , is this:

                  <section> 8.1. Order of Payments

                  Since a child can be a beneficiary of more than one <abbr>RESP</abbr> at a given time, the <abbr>CESP</abbr> System responds to requests for the <abbr>CESG</abbr> on a first-come, first-served basis.
                  Therefore, when multiple grant requests for the same beneficiary are received for the same monthly reporting period, the <abbr>CESG</abbr> will be paid to the first successfully submitted request.
                  If more than one grant request has the same contribution date, the <abbr>CESG</abbr> will be pro-rated across all successfully processed requests.
                  </section>

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                  • #10
                    Thank you all so much! I think I have everything I need. Now the usual fun part - going back to her with a response.

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                    • #11
                      My understanding is they will pay it into two separate accounts. The problem is the more account you have the more likely they are to over contribute and reach the max grant.

                      I opened my own and my ex did as well.

                      So far I have gotten all the grants I am entitled too in my RESP. I cannot say about my ex's.

                      Comment


                      • #12
                        I've recently gone through a very similar situation. In my case, I am the payor and had an agreement to contribute into an RESP in lieu of child support, or put in other words, we agreed to re-direct child support to an RESP.

                        My advice after many months of litigation is keep your RESP separate. RESP Savings as a choice and a future expenses that will be divided as per your income at that time (Valid Section 7 expense). My advice is to divided your RESP account, or put provisions in your separation agreement that the current RESP (Account number and value) be allocated entirely to the child and provisions should the child not attend post secondary education.

                        It can get messy and you could find yourself in a situation where you cannot agree on the savings or how the money is withdrawn. It will be much simpler to stay away from this as a potential problem and take care of your own investment strategies as you will be on the hook for your pro-rated share of post secondary education.

                        Comment


                        • #13
                          Originally posted by Dee1973 View Post
                          EX and I are separated but no formal separation agreement yet.
                          Big problem. You need to get working on one. By moving out you have essentially given her primary residency and set yourself up to lose for shared custody.

                          Originally posted by Dee1973 View Post
                          very little expenses and flush with disposable income.
                          Have you split your assets? Did she pay you for your half of the house that you moved out of? Have you taken your name off the title, mortgage, utilities, etc?

                          Originally posted by Dee1973 View Post
                          I pay her $740 a month in CS.
                          Why? Is this based on your line 150 table amount from last year or your current paycheque? Why is she not paying you CS if you have shared custody? What says you have shared custody? What is your child schedule?

                          Originally posted by Dee1973 View Post
                          The kids of lunch programs at school, pizza day, etc. She expects if the kids have pizza day that costs $10 that I pay $6 and she pay $4 - the same as section 7.
                          Lunches are not section 7 extra ordinary. They should be split as ordinary expenses 50/50 in shared custody situations (which means she pays your CS as well, but is she?). In joint/sole custody situations where one parent pays CS ordinary expenses (like lunches) the parent receiving CS pays 100% ordinary expenses.

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