October 16th, 2009 by Questions

If I declare bankruptcy and there is say $20,000 in the Children`s RESP account does the Trustee deduct the whole amount or is the $20,000 reduced by the Government contribution of 20% and any withholding taxes? The fund was over $30,000 prior to the recent banking crisis.

Posted from: Ontario


One Response to “RESP`s”

, A licensed trustee said:

The RESPs will have a “cashout” value – your trustee is required to collect an amount equal to the cashout as part of your bankruptcy. That means you may be given the option of paying an amoutn equal to the cash out in order to keep the RESPs. IF you can’t afford to do that then the RESPs will be “cashed out” as the only other way to get at the money. If that happens the government is repaid the amounts they have advanced and the trustee receives the net value of the fund.

You may want to consider a proposal instead of bankrutpcy as it will allow you more time to make the payments to your trustee.

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