Couples who are separating often overlook Registered Education Savings Plans (“RESPs”) when considering what assets to divide. Sometimes these RESPs are in one or both of the spouse’s names.
RESPs are an asset that many couples have in high value or high asset divorce because financial advisers rightly encourage clients to take advantage of the RESP due to the government matching funds. When the RESP is established nobody considers what will happen with the fund upon separation or what to do with the RESP in a divorce.
RESPs are assets that must be disclosed in family law court proceedings. However, how they are dealt with really vary by the party. If couples are content with continuing to contribute to a joint RESP and are able to work cooperatively then keeping it a joint asset may be an option for you. This becomes problematic down the road if one spouse declares bankruptcy, or a child does not want to study after high school. Unlike and RRSP, RESPs are not protected from creditors and could be affected as would any other joint asset upon bankruptcy.
If you are in a high conflict separation, you should consider the ability to work with your former spouse on financial matters. If communication is poor, keeping a joint RESP is not a good choice.
Getting early and clear advice from a financial advisor is recommended. Often this advice can present options that would allow you to maintain your RESP, or start new separate RESPs and still be able to continue to receive matching government contributions.
If you have questions about your divorce or separation, or asset or property division contact Windsor family law lawyers Mary Fox, Tanya McNevin or Thomas MacKay today by calling 519-259-1820. We serve clients in Windsor, Tecumseh, Lasalle, Essex, Leamington, Kingsville, Belle River, Lakeshore, and throughout southern Ontario.