RESPs, Trusts, and You

  • October 06, 2022
  • Joanna Lindenberg and Chris Cook (articling student), de VRIES LITIGATION LLP

A Registered Education Savings Plan (“RESP”) is a cost-effective way of saving money for a child’s future post-secondary education. The concept of the RESP raises the question of who actually owns the funds therein. Is it the parent who contributes to the RESP (the “subscriber”) or the child for whom the RESP was created in the first place (the “beneficiary”)? According to Justice Faieta in Labatte v Labatte (Labatte”), the answer is that the assets in an RESP may belong to the subscriber, except where the RESP is being held in trust for the beneficiary. This, however, begs another question: when might an RESP be held in trust?

In Labatte, the parties had jointly set up an RESP for their two children. After divorcing, both parties continued to make contributions to the RESP. When the eldest child decided to enroll in studies at McGill University, she requested a disbursement from the RESP account to pay for her tuition. The father refused to consent to a release of the funds on the basis that he owned them. Conversely, the mother took the opposite position and maintained that the RESP funds were held in trust for the two children. The mother sought to have the RESP account transferred solely into her name.