# RESP planning



## Daryl-Manitoba (Sep 14, 2010)

Hello All,

My son was born last week and I figure its a good time to start planning for his future. I'm a little confused between CCTB and UCCB but I'm expecting that we will be getting $100/month from one of them, not sure if we can expect anything from the other (we have a household income of about 90K).

My original plan was to take that money, dump it into a high interest savings account along with any other money gifted to him. Then every $500-$1000 transfer that money into a Questrade Family RESP which would be setup with some form of a couch potato portfolio. When my second child arrives a few years from now I would do the same, but with twice the money.

Mainly what I'm looking for is how much "government money" can I expect per month and how long will I collect this for. I've read stuff about only collecting credits until age 6. At the moment we aren't planning on dumping much of our own money into an RESP, especially if we can get the government to fund it.

Also does my plan above make sense as far as taxes go and if now how could it be improved?

I'm open to any suggestions that you may have.

Thanks


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## HaroldCrump (Jun 10, 2009)

Daryl-Manitoba said:


> My son was born last week and I figure its a good time to start planning for his future.


Congratulations!
It's one of the most exciting times in your life.
I'm surprised you are getting enough sleep to even think about RESP, but kudos to you.


> I'm a little confused between CCTB and UCCB but I'm expecting that we will be getting $100/month from one of them, not sure if we can expect anything from the other (we have a household income of about 90K).


UCCB is $100 a month per child until they are 6.
http://www.cra-arc.gc.ca/bnfts/uccb-puge/menu-eng.html
CCTB is dependent on the income level.
You should receive some CCTB at your income level, but there will be some cut back.
http://www.cra-arc.gc.ca/bnfts/cctb/menu-eng.html

In addition, within an RESP, you will receive the CESG grant.
http://www.hrsdc.gc.ca/eng/learning/education_savings/public/cesg.shtml
There are additional CESG grants, too, like CLB but you won't be eligible for that.


> My original plan was to take that money, dump it into a high interest savings account along with any other money gifted to him. Then every $500-$1000 transfer that money into a Questrade Family RESP which would be setup with some form of a couch potato portfolio. When my second child arrives a few years from now I would do the same, but with twice the money.


Sounds good.
Just set up the plan as a family plan.


> Mainly what I'm looking for is how much "government money" can I expect per month and how long will I collect this for. I've read stuff about only collecting credits until age 6. At the moment we aren't planning on dumping much of our own money into an RESP, especially if we can get the government to fund it.


The above links will tell you exactly how much you will get, depending on your income level and province of residence.
Collecting is as simple as designating an account with the CRA where the money would come in - similar to your tax refunds.


> Also does my plan above make sense as far as taxes go and if now how could it be improved?


There won't be any taxes inside the RESP.
You will have some income tax on the funds that you will be collecting in the savings account until you do the deposit into RESP, but it should be very small at today's interest rates.

Good luck!


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## Four Pillars (Apr 5, 2009)

HaroldCrump said:


> In addition, within an RESP, you will receive the CESG grant.
> http://www.hrsdc.gc.ca/eng/learning/education_savings/public/cesg.shtml
> There are additional CESG grants, too, like CLB but you won't be eligible for that.


He might be eligible for some additional grants - if the net family income for 2010 is less than $81,941, they can get an additional 10% on the first $500 of contributions.

Note that "net income" means after certain deductions like RRSP, child care etc.

http://www.cra-arc.gc.ca/E/pub/tg/rc4092/rc4092-10e.pdf


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## Sampson (Apr 3, 2009)

Mike from Money Smarts Blog has a new book out on the subject.

I don't get endorsements, but from what I've seen, it is very comprehensive and a good buy for people new to RESPs.


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## plaza (Sep 16, 2010)

Congrats Daryl!!


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## Addy (Mar 12, 2010)

Congratulations! And extra congrats for looking ahead for your child's future so soon after his birth!! 

One thing, if you don't know already, is make sure you know the plan you're getting into. Some RESP providers have awful clauses (some which I think should be deemed illegal) such as if you don't use the money, you loose all of it - not just the gov't portion or the interest, but all of it.

Some plans have caps such as only so many students per year can redeem their RESP's, other plans have caps such as limits on the $ amount per year and others specify what school, some even what program your child has to attend to redeem their resp.

As you can tell, companies that offer RESP's in a way that they leech money from unsuspecting, well intentioned folks disgusts me (I'm a recent parent). Daryl may already be aware of how some of these RESP companies work, but I can't imagine everyone is aware.


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## HaroldCrump (Jun 10, 2009)

The best thing to do is stay away from RESP "companies" of any type and go the self-directed way.


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## FrugalTrader (Oct 13, 2008)

Sampson said:


> Mike from Money Smarts Blog has a new book out on the subject.
> 
> I don't get endorsements, but from what I've seen, it is very comprehensive and a good buy for people new to RESPs.


+1 I've read the book and it's very good. Going to write a review on it in the coming weeks.


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## Ben (Apr 3, 2009)

There was an article in the Globe today, for which Four Pillars was interviewed. There was a comment left on the article that caught my attention:

_For grandparents, or anyone for that matter, who have set themselves up as the Subscriber for a Beneficiary of the RESP (child, grandchild, niece, nephew), make sure in your will you name a successor Subscriber to the RESP, or the account will be collapsed into the estate, taxes that were deferred will be due, and grants will be returned to the government--the beneficiary will get nothing. There is no provision at this time to designate a successor Subscriber when setting up the account (as is the case with a TFSA or RRSP in most provinces)._

Here's the primary source, where presumably the gold standard answer can be found. 
http://www.canlii.org/en/ca/laws/stat/rsc-1985-c-1-5th-supp/latest/rsc-1985-c-1-5th-supp.html#_Registered_Education_Savings_Plans_8239112

Here's a reference I found, for the Cole's Notes version (written in BC).
http://rulelaw.blogspot.com/2008/01/estate-planning-and-registered.html

_First, if you and your spouse (or common law partner) are joint subscribers, then your spouse (or common law partner) becomes the sole subscriber on your death.

Second, some plans may allow you to name a successor subscriber in the contract.

Third, if you do not have a joint subscriber, and you have not named a successor in the contract, then you can name a successor subscriber in your will.

Fourth, the executor of your will is entitled to administer the RESP if there is no joint subscriber, and you have not named a successor subscriber in the plan contract or in your will._

We are finally setting up the RESP in a couple days. We have our wills done, and would prefer not to revise them. The wills do not mention RESPs specifically. We will be joint subscribers, so the RESP continues OK if only one of us knocks off. In the event of both parents' death, we would like the executor to become subscriber to the plan. In Ontario, what is the best way to ensure the executor becomes subscriber to the RESP, without revising the wills? According to the above, Option 2 would be the first thing to try, and failing that, perhaps Option 4 will kick in. Like to be sure.


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## Ben (Apr 3, 2009)

In my post above, probably should have started with the question first, rather than burying it at the end.

In Ontario, what is the best way to ensure the executor becomes subscriber to the RESP, without revising the wills?


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## Four Pillars (Apr 5, 2009)

Ben said:


> In my post above, probably should have started with the question first, rather than burying it at the end.
> 
> In Ontario, what is the best way to ensure the executor becomes subscriber to the RESP, without revising the wills?


From what I understand, the RESP account becomes part of the estate. I believe (but I don't know for sure) that the beneficiaries of the will can agree to keep the RESP intact and assign a new subscriber (executor or otherwise).

I'm not sure of the exact legalities of that + there is no guarantee everyone will play ball.

Unless someone here (who actually knows what they are talking about), can come up with a better plan - I would suggest either 

1) Change the will - is it really that big a deal?
2) Assign a new subscriber when you are still alive and don't let it go into the estate.


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