Can the CRA seize a RESP?
We have an RESP, issued in joint names of my spouse and me, with three children as named beneficiaries. The CRA has issued a requirement to pay in my name only. My FI will not permit any payments from the RESP – we were seeking an EAP for one of the named beneficiaries school this fall…. I’ve talked with the FI and CRA and neither can confirm this is proper. Thanks,
In general, an RESP does not form one of the assets that are protected from seizure by a creditor. Therefore, if CRA has issued a requirement to pay, they are able to seize funds from an RESP account that is in your name.
If you are a co-owner of the account, they should only be able to take 50% of the available funds from this account as your spouse would be able to retain their portion of those funds.
While a bankruptcy can stop a requirement to pay, you would run into a similar issue with the RESP upon filing for bankruptcy. In bankruptcy, the Trustee would have a right to your share of the available RESP funds. The difference is you can sometimes make arrangements with the Trustee to make monthly payments that will eventually equal your share of the funds. This allows the funds to be retained in the RESP account and allows you to keep your share of the government contributions. The Trustee may also allow you to access your first withdrawal for your eldest child. This would depend on several factors including the value of the RESP and your ability to make payments.