Grandparents + other champions
Types of champions
There are three types of people (other than parents) who are most likely to contribute to a child’s RESPs:
In the world of RESPs, it doesn’t matter who you are: a parent, grandparent, aunt, uncle, cousin, neighbour, or anyone else. As long as you’ve got love and some money to contribute, you are welcome to provide children with the gift of education.
Ways to give
Grandparents and other non-parent champions usually give in one of two ways:
Open an RESP that the champion controls
As long as both the subscriber and the beneficiary have Social Insurance Numbers, anyone can set up a Flex First RESP account for a child. With this approach, the champion (not the parent) is the subscriber and controls the RESP, including how and when funds are withdrawn.
Contribute to an RESP that the parents control
Providing a gift contribution to an RESP set up by the child’s parents is a very popular approach, especially in the early years of parenthood when money can be tight. It’s a great way to provide a gift that lasts a lifetime, instead of, or in addition to traditional gifts like toys. In this scenario, the child’s parents can control the gifted funds, including how and when they are withdrawn. Speak to a Knowledge First RESP expert to learn how to do this easily.
Advantages of setting up an RESP for a grandchild
Beyond the fact that grandparents love their grandchildren dearly, RESPs also have estate-planning benefits. Grandparents can name grandchildren as beneficiaries allowing wealth-transfer to happen early and for the grandchildren to flourish because of it.
Furthermore, when the grandchildren enroll in post-secondary school, they can benefit from the income generated in the RESP, and that income is withdrawn tax-free in most cases.