- October 12, 2023
- Posted by: legaleseblogger
- Category: Related News
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How AI Legalese Decoder Can Help with Opening an RESP Account for Your Son and Your Mother-in-Law’s Insistence
Introduction
When it comes to opening an RESP (Registered Education Savings Plan) account for your son, you may encounter situations where others, like your mother-in-law, express interest in opening an additional account in their name. It is essential to thoroughly understand the implications of such a decision and its potential impact on your child’s future. This dilemma can be quite puzzling, but with the assistance of an AI Legalese Decoder, you can navigate through the complexities and gain clarity on this matter.
Understanding the Situation
Your mother-in-law’s persistent desire to open her own RESP account for your son raises questions and concerns. While you are open to her participation in your account, her insistence on managing a separate account may not be immediately comprehensible. To gain a comprehensive understanding, you may consider utilizing an AI Legalese Decoder to interpret any legal implications associated with individual RESP accounts and their potential impact on your child’s future.
Exploring the Benefits
To comprehend the potential advantages or motives behind your mother-in-law’s desire to open a separate RESP account, using the AI Legalese Decoder will aid in unraveling any legal complexities. By doubling the length of your original content, we can delve deeper into this topic. Your mother-in-law might perceive benefits such as having a more active role in managing the educational savings plan independently, contributing according to her own financial capacity, or securing potential tax advantages.
Anticipating Future Implications
Concerns regarding how having two separate RESP accounts might affect your child’s future are valid. With the help of an AI Legalese Decoder, you can better comprehend the consequences of such a decision. By expanding upon your initial content, we can discuss potential drawbacks, such as possible discrepancies in contributions, differing investment choices, or complications in accessing funds. Through interpretation, the AI Legalese Decoder can provide insights into the long-term impact on your child’s educational savings journey.
AI Legalese Decoder Assistance
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Conclusion
Opening an RESP account for your child while also addressing your mother-in-law’s desire to open a separate account may seem puzzling. However, by using an AI Legalese Decoder, you can gain a deeper understanding of the situation. This tool helps you comprehend the benefits your mother-in-law sees in opening an individual account and sheds light on potential ramifications for your child’s future. By leveraging the AI Legalese Decoder’s expertise, you can engage in informed discussions and make sound decisions regarding your child’s RESP account.
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AI Legalese Decoder: Simplifying Legal Language
Introduction:
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****** just grabbed a
I am on the other end of this. My BIL is terrible with money and has young kids. We would like to contribute to an RESP for them, but 100% donÔÇÖt trust him to not take the principal out.
So his kids donÔÇÖt get an RESP.
When my mother wanted to contribute to my kids schooling fund, we agreed that RESP was not the right route. I planned on maxing the govt grants myself with an RESP. She opted to use some kind of informal trust that she pays taxes on each year so the child isnÔÇÖt taxed when money is needed. Now that the kids are in Uni, she withdrawals a set amount each year to contribute alongside my RESP.
My mom once opened an RESP for me and so did my grandparents. My mother was never great with money and hit a hard time financially and withdrew it all. She wasnÔÇÖt however able to withdraw from the account my grandparents set up since it was in there name and mine.
Your mother in law could be worried that she puts in 5,000 or 10,000 over the course of your childÔÇÖs life and you hit a financial problem and withdraw it all. Or say you get divorced in 10 years and remarry someone with kids and add them into the account. They could then use the money your mother in law out in. IÔÇÖm all for whoever wanting to start a savings account for my kid, as long as they arenÔÇÖt shady and I can trust them with their sin.
[deleted]
As a parent you take control of RESP. if anyone else wants to contribute they can provide money to you. In case they needs to know that you really put money in RESP , you can show them contribution receipts or statements.
You MIL clearly doesn’t trust you for whatever reason. The person who opens the RESP retains control of it. Ultimately she can take the principle out and ultimately the account belongs to her.
I think the main issue if she does this, she may get some or all of the grant. Grants are 20% I believe of contributions, so not sure how this would work if you both contributing, one of you would get the grants and the other may not.
Also NEVER EVER GIVE YOUR SIN TO ANYONE EVER, NO NO NO including your MIL, this is open for abuse. So if you haven’t please don’t.
She can open a different savings/trust account for your kid, it doesn’t have to be an RESP. Just say no, she doesn’t get to decide or dictate (not saying she is), but this sounds like it could potentially have red flags all over it.
She is probably worried you will take the money for yourself if she contributes.
There is nothing inherently wrong or forbidden about having multiple RESP accounts for the same beneficiary, but it will make the burden of accounting and coordination higher with regards to which account gets CESG (the 20% govt match), and potentially lifetime contribution limits.
With regards to “benefits to your MIL”, as the subscriber on her own separate account it would mean she could get her contributions back at any point in the future, since the account is legally hers.
Your mother in law doesn’t┬átrust that you will put money into the RESP. Or she is worried about your ability to save, or that you can’t contribute enough to max out the grants.
This could be interpersonal drama. Or it could be smart, since sometimes parents spend money intended for grandkids rather than saving it.
Let her know that you’ve got the RESP handled. If you are capable of maxing out the government contributions, let her know that. If not, let her know that she is welcome to pass money to you for deposit into the RESP.┬á Follow up with proof of deposit.┬á
She is welcome to start a non-RESP savings account herself. She can then pass that money directly to the child whenever she wants. 
For the reasoning, make sure it isn’t because she wants to help out a friend selling group RESPs.
The custodial parent needs to sign off on it in order to get the grant money ([ANNEX B](https://www.canada.ca/content/dam/canada/employment-social-development/migration/documents/assets/portfolio/docs/en/student_loans/resp/forms/sdr0093-b.pdf)). So unless you sign off on it there’s no point in her opening one to maximize the grant money received.
Are you bad with money?
I give the money to my son and he puts it in my grandbabies RESP account that HE controls. One of the benefits is that years when he & wife have lower income; they get an additional top up in the RESP account. ItÔÇÖs harder for you to keep track of the contributions of you donÔÇÖt have it all in one place. ItÔÇÖs a sign that she doesnÔÇÖt trust you to
Put the money in the account so offer to show a deposit slip so she knows you did. More mess to deal with when grandparent dies. Life has enough to juggle, as does a death. I think itÔÇÖs unreasonable for a grandparent to want control of this.
Tell her what I told my mom:
We want to manage and track the RESP contributions ourselves. If you want to contribute to their education, you can either give us money that we contribute for them, or you can save it in your own account and gift it to them for tuition when they’re 18+.
By telling her that, it settles two things. One, it says “Yes, we’d love for you to help with their future”, but it also says “Don’t worry, we’re not going to miss out on the government grants.”
Whenever my parents/in-laws want to help out with our kids RESP – they simply give us the funds and we would add it to our kids’ RESP that we manage ourselves. Makes things less complicated and easier to manage.
ThereÔÇÖs no point to a second RESP if youÔÇÖre already maximizing the government grants.
What MIL should do is just start a separate TFSA for your son- and she can gift it to him when he graduates high school. Assuming she has the TFSA room
ItÔÇÖs not going to be a problem for your child if everything goes according to plan. That is, your MIL contributes up to the annual limit to maximize the grant and the investments do ok and she letÔÇÖs your child access it for their education.
However, there are some things that can go wrong:
1. The investments technically belong to your MIL, therefore if she ever needs money or changes her mind about providing it to your child, she can withdraw the funds herself. In this case the government grant portion would need to be returned and she would pay taxes on income above the original investment. So even if you accumulate funds separately for your son, if the RESP set up by MIL is dissolved by her, you would likely miss out on the government matching which is the most beneficial part. So I would think about MILÔÇÖs financial situation (would she ever need this money) and her general attitude towards you and your family. Are you in good terms? Would she ever take the $ back in case of divorce and remarriage and more/other grandchildren?
2. She may not contribute the maximum amount for matching every year or not contribute on an annual basis. This would create an administrative issue of having to track how much extra you should contribute annually, and catch up years for matching, etc. So I would try to explore her intentions and even then check in with her and ask her to provide documents to your spouse for tracking contributions, so you can maximize the grant amount.
3. She may invest the funds poorly. Hard to do anything about this one, but it is a risk.
If she were to give you the money to put in the RESP you set up, you could technically withdraw it yourself at any time. So she is possibly concerned about that. Or she might be concerned in the first place that you are not putting it in the account directly. You could offer to provide her proof of this. Or maybe she wants to be the one to say that she provided for your childÔÇÖs education. Which could be totally fine.
I would really look at how much she wants to contribute (like all of the annual max for matching and every year) and how much I trusted her to follow through and also to not withdraw or withhold the funds. I would also be sure that she is knowledgeable about how the grant works.
If I felt comfortable on the above, I would let her set up the RESP and make her contributions, but would be setting aside funds (TFSA if there is room) for the childÔÇÖs education as well. Or if she wasnÔÇÖt making the full contributions or not every year, then I would also set up an RESP and supplement to maximize the grant.
If I didnÔÇÖt feel comfortable with any of the above, I would tell her that we are planning to max out the yearly contributions but she could save separately. However you are risking that this will turn her off and she will decide that she doesnÔÇÖt need to save/contribute.
She doesn’t trust you and thinks you’ll take the cash out.
Do multiple accounts compete for the distributed grants?
ItÔÇÖs your child. You do what you want.
ItÔÇÖs not that odd or rare of a scenario. She can put in the capital with the intention of doing EAPs from grant and growth when your kid goes to school and taking the capital and any remaining growth back once your kid finishes school. In an ideal world scenario an RESP would be used in that way so that the accumulated grants and growth can be used for education without the need to touch capital. Of course thatÔÇÖs not how it works in many cases because school is expensive and the markets donÔÇÖt always work in your favour.
ThatÔÇÖs kind of weird. My mom wants to contribute to my sonÔÇÖs, so she just sends me some money annually and I buy the ~~Bitcoin~~ globally diversified ETF.
I kind of went through that too with my MIL. She wanted to make my kids an account. I said you can contribute to the account I had made. She didn’t trust me because I own individual stocks in my personal accounts and it kind of got left at that. Ya not an easy Subject.
Let MIL open the account. I’m not sure why this is an issue. Yes, the second account may miss out on CESG from the government, but it’s what the MIL wants to do. This doesn’t hurt anyone and benefits your child.
MIL could do an open account. She could take out a life policy on herself to gift to the child. There are so many options that she could take to help her grandchild in any way she chooses. Count yourself lucky you have family who want to even do this.
What if she has conditions that you and/or child do not agree to when the time comes for the money to be disbursed? Will she withhold funds?
As far as I know, you can’t open a RESP account “in your name”. The account will be in the name of the child, and the people responsible for that child can control the account. Also, the RESP contribution has a limit, and if that limit is passed there are charges – and the only way to control that is by having all accounts for a child in the name of that child.
I would say it’s great MIL wants to help with child’s education, but it’s a little icky that she doesn’t want to simply contribute to the existing account.
I set up a RESP for our grandchildren; apparently that makes me some kind of asshole, according to the comments in this thread.
When they are old enough, the grandchildren will decide what it gets invested into.
The parents are grateful; it is free money from grandma and grandpa to support their kids education.
You people suck.
Our MIL opened one for the kids, too. We have three different RESP accounts.
The more the merrier, I say.
If you have disagreements with your MIL, there are bigger crosses to die on than this. Ultimately it benefits the child – not her, nor you. Let her do her own thing if she wants and enjoy the peace.
My grandparents bought $500 Canada *Learning Bonds for me (back in the 90s lol) so that the money was stable and mine. They’d do it every Christmas.
My parents did convince me when I was 10 that they “needed” that money and I signed it over unfortunately. But maybe those are an option for her? She can hold onto them if there isn’t trust for whatever reason she has.
*Savings – which I have been informed are discontinued. My mistake.
ThatÔÇÖs shady af!! Just tell her to open a savings account for your baby under her name with your son to be the beneficiary, and deposit the same amount and contributions as the RESP and whenever she wants she can just withdraw the money for your son.
Does she have otherwise controlling tendencies?
If she opens it, she is the one who withdraws from it.
She can keep what she invested in it. No issue here.
Your aunt wants to control her original contributions. If something happens, the Owner can withdraw the contributions and close the account, (returning the government funds, if any. )
Her contolled account means that you can’t withdraw the money contributions and use them to buy ypurself a car or something. Her owning it protects against that. It protects against you getting a divorce and your ex early withdrawing half of aunts contributions, too.
Or, maybe she just thinks she can get it to rise in value more by investing it her way.
This could work, but you need to contribute your max to your resp each year first, in January, and she can contribute the remainder later in the year to her resp. Eg. June. Why? You want to have the government matching in your resp as you can’t protect it from disappearing otherwise.
Note, max contributions over lifetime are $50k per child, and only a small portion of that has any govt contributions, so there is a lot of room for your aunt to contribute after your money is in there. Just set a limit to her one time contributions so you can maximize the government matching funds.
She needs to use a trust or other investment account.
She canÔÇÖt open a RESP without your childÔÇÖs SIN. You can use that as a way to stop her from opening one.
The problem with a RESP is that the money is for the person that subscribed to it, not specifically for the child. The benefit of gaining free money from the governement is what she would lose if she decides to keep the money later. She would lose the grant money and the interest accumulated on it. ItÔÇÖs a risk that she would keep the money for herself later.