RESPs are an effective tool for assisting family members with education costs. However, opening an RESP is not akin to setting up a trust that will flow at death to the named beneficiaries — as do funds from an insurance policy, RRSP or RRIF. An RESP can run into complications in an estate planning context, particularly in blended families.

An RESP is a registered contract between the subscriber establishing the plan and the financial institution or organization. RESPs generally allow access to government savings programs, including the Canada Education Savings Grant (CESG). Subscriber contributions and government grants earn income inside the plan. Often, RESPs are set up with a single subscriber, such as a parent or grandparent, who allocates after-tax funds for the benefit of the beneficiary. The plan may also be set up by spouses and partners with “joint subscriber” status.