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Planning for Registered Education Savings Plans (RESPs) in Wills
To ensure child beneficiaries inherit RESP benefits, parents and grandparents should specify RESP instructions in their wills, naming a successor subscriber to avoid plan collapse and potential tax liabilities upon death.
- How can the continuation of an RESP be ensured after a subscriber's death?
- Having joint subscribers (spouses or common-law partners) allows for automatic succession in most provinces. Alternatively, designating a successor subscriber in the will ensures continuation, even if both joint subscribers predecease the beneficiary. Naming the estate or a testamentary trust as the successor is also possible, but it involves added complexities and costs.
- What are the immediate consequences of not including RESP instructions in a will?
- If a will lacks RESP instructions, the RESP assets become part of the deceased's estate, potentially preventing the child beneficiary from receiving them. The estate's beneficiaries may inherit the assets instead, according to the will's terms or intestacy legislation. This outcome contradicts the plan's original purpose.
- What are the potential long-term implications and challenges associated with the lack of RESP planning in estate documents?
- Without a successor subscriber, the RESP might be liquidated, resulting in tax liabilities on investment growth and the repayment of government grants. Furthermore, if beneficiaries disagree on how the RESP value should be distributed, it could lead to significant delays and disputes among estate heirs, potentially causing the entire process to fail.
Cognitive Concepts
Framing Bias
The article presents a balanced view of the complexities surrounding RESPs and estate planning, highlighting both the potential pitfalls and solutions. It doesn't overtly favor any particular viewpoint, though it emphasizes the importance of proactive planning.
Language Bias
The language used is largely neutral and objective, employing straightforward explanations and quotes from experts. There's no use of loaded language or emotionally charged terms.
Bias by Omission
While comprehensive, the article might benefit from including examples of specific will clauses addressing RESP succession. Additionally, discussing the tax implications of different succession scenarios in more detail would enhance clarity. However, given the scope and target audience, these omissions are understandable.
Sustainable Development Goals
The article directly addresses the importance of Registered Education Savings Plans (RESPs) in ensuring children's access to post-secondary education. Proper planning through wills and power of attorney documents can safeguard these funds, directly supporting SDG 4 (Quality Education) which aims to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.