March 23rd, 2009 by Questions
are funds in a childrens RESP account safe in the parents bankruptcy
Posted from: Alberta
March 24, 2009 at 7:03 am, A licensed trustee said:
Unfortunately they are not safe – your trustee will be required to “realize” on this asset. The term “realize” means turn the asset into cash – the good news (sort of) is that instead of collapsing the RESP you have the right to pay your trustee an amount equal to the collapsed value.
For example, let’s say you have $2,000 in the RESP. If it is collapsed the government will take back the grants they have given you and tax the withdrawal. In most cases you receive less than half the value of the RESP. So, if you agree to pay your trustee an amount equal to the cashed out value yuo actually can keep the full amount for you children.
Contact a trustee in your area and they can explain this more fully to you.
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