The Planning Surrounding Registered Education Savings Plans

A Registered Education Savings Plan is a way to save money for a future student’s post-secondary education in a way which allows for not only tax-deferral but also for government contributions towards that future student’s (“beneficiary’s”) education proportionate to the contributions made by the “subscriber” of the RESP.

A Registered Education Savings Plan (RESP) is a contract between the subscriber and a promoter (the bank or other financial institution holding the RESP). The subscriber (generally, parents) can contribute to RESPs as much as they want on an annual basis but the total limit for contributions is $50,000.00 per beneficiary – contributions made beyond this limit become taxable. The subscriber is the only one with legal authority to direct withdrawals from the RESP while he or she is alive.

What happens when a subscriber becomes incapable? If the subscriber has a continuing power of attorney for property in place then the appointed attorney may be faced with the question of whether or not to continue contributing towards the RESP. As an initial step, the attorney for property will want to review the contract between the subscriber and promoter, and should also review the terms of the power of attorney itself. The attorney should seek legal advice to assist with this process. If there are no restrictions in the contract and if the RESP is not specifically mentioned in power of attorney, it may be to the attorney’s discretion as to if he or she should continue contributing to the RESP on the incapable person’s behalf. Even if this is the case, the decision to contribute (and how much) would need to be based on the incapable person needs, care and support, as the attorney’s primary concern is to ensure the incapable person’s assets are utilized to satisfy his or her welfare.

How RESPs are dealt with when a subscriber passes away depends on the circumstances. If there are joint subscribers (i.e. if two parents are subscribers of an RESP), then if one person passes away, the other will automatically continue on as the sole subscriber.

The RESP contract between subscriber and promoter will indicate whether or not the plan ends when the subscriber passes away or if the plan can be continued with a successor subscriber. If the plan can be continued, the contract may set out if the subscriber is permitted to name a successor subscriber, if the subscriber’s personal representative can act as the successor subscriber, and may also set out requirements or restrictions on successor subscribers.  Most plans will allow for a successor subscriber to be appointed by the subscriber and if so, this can be done by appointing the successor subscriber in the original subscriber’s Will.

On a subscriber’s death, there may be questions around whether the property held in the RESP reverts back to the subscriber’s estate or if it beneficially belongs to the beneficiary of the RESP. Including a specific RESP clause in a subscriber’s Will can be helpful not only for the purpose of naming a successor subscriber, but also for the purpose of creating certainty around how the subscriber intended the RESP to be dealt with on his or her death, which can prevent some confusion, and in the worst-case scenario litigation, from arising later. If you are a subscriber of an RESP, consider reviewing the terms of the contract with the promoter (financial institution) to find out what the terms allow for in succession planning and discuss with your estate planning lawyer how to properly deal with your RESP in your estate planning documents.

By: Karen A. Forhan

Capacity Assessments Going Online

With an aging population, lawyers who assist clients with making Wills will now more frequently need to make determinations about whether or not a client has the capacity to make a Will. To be capable of making a Will involves understanding the relevant facts and appreciating the reasonable and foreseeable consequences of making or not making a decision when it comes to the Will.

It is well-understood that capacity is a fluid concept – just because someone is diagnosed with dementia does not necessarily mean they are incapable. A person’s capacity is task and decision specific and depends on the person’s state of mind. The lawyer taking instructions from a client will want to see if the client has a clear and consistent rationale for their estate plan decisions. When lawyers have doubts about a client’s capacity, or if a lawyer feels that there may be family members or others (i.e. disappointed beneficiaries) who may question the person’s capacity to make the Will in question, they may ask the client to obtain a letter from his or her family doctor regarding his or her capacity.

To date, doctors have used certain standard testing practices for testing a patient’s capacity such as the Montreal Cognitive Assessment (MoCA) and the Mini Mental State Exam (MMSE). Both MoCA and MMSE are brief cognitive screening tools which test for areas such as memory, language, visual-spatial ability, orientation, calculations, and concentration. Both tests provide the patient with a score out of 30 –  a score of 26 out of 30 being considered “normal.”  These tests are relatively short to administer (between seven and ten minutes) and are conducted by medical professionals.

At the University of Western Ontario, Dr. Adrian Owen and the neuroscience lab has been working on studying how cognitive assessment can be enhanced using web-based tools by creating computerized tests that can be taken entirely online, such as the Cambridge Brain Sciences platform. The online assessment produces a report which provides a summary of how the test-taker scores relative to other people of the same age/demographic – for example, the report could say the test-taker performed better than 80% of people in their cohort. This is different from the pass-fail method of tests such as MoCA or MMSE, which do not provide this type of comparison.

Because of the nature of online testing, there is data that can be collected which is not possible through the standard paper and pencil tests, such as testing response time to questions.

Unlike traditional tests, online testing can create more definitive results to classify test-takers with marginal scores.

As online testing can be administered anywhere, the possibility now exists for a lawyer to have a client take the online test without leaving the lawyer’s office The question is whether the lawyer’s office is the most appropriate place for such testing to occur. For example, what if the client’s report does not produce a clear and obvious result, such as if a client scoring 40% worse than people in their cohort, what does the lawyer do from there? Presumably, the lawyer would then still need to ask the client to go to their family doctor or – better yet – a qualified capacity assessor to obtain a further assessment. If the test cannot be analyzed by the lawyer sufficiently, then it may be moot to offer that the client take the test in front of the lawyer without medical professional assistance and without corresponding results from other cognitive assessment testing.

Nonetheless, computerized capacity testing is a positive development, as capacity is becoming all the more relevant and needed with today’s aging population.

By: Karen A. Forhan

Firearms – To Gift or Not to Gift

Summary: Things to consider when a testator/testatrix wants to gift a firearm.


In today’s society, individuals want to gift all sorts of personal property to beneficiaries,   including firearms.

So, when talking to clients that wish to gift firearms some things to consider are: Has the testator/testatrix spoke to the beneficiary about receiving the firearm?  Does the beneficiary want the firearm?  Should the firearm be gifted prior to death?

If the beneficiary would like to receive the firearm consideration needs to be given as to whether the beneficiary holds a firearms licence.

There are three types of firearms licences for individuals in Canada:

  • Possession and Acquisition Licence: allows the licence holder to possess and acquire firearms and ammunition.
  • Possession Only Licence: allows the licence holder to possess, but not acquire, firearms, and to both possess and acquire ammunition.
  • Minor’s Licence: available to individuals under the age of 18. It allows the licence holder to use non-restricted firearms for the purposes of target practice, competition, hunting, or instruction in the use of a firearm.

It is a criminal offence punishable by up to 5 years in prison for an individual to possess a firearm without a licence.

In Canada, a firearm may only be transferred to one of the following:

  • An adult (18 or older) with a Possession and Acquisition Licence that is valid for the class of firearm being transferred.
  • A business, museum, Legion or other organization with a valid Firearms Business Licence; or
  • A public service agency – for example, a police force, a police academy or a department or agency of any level of Canadian government (federal, provincial, territorial or municipal).

Transfers can be made online, by telephone or by paper application.  A registration must also be completed in order to reflect the transfer.

A Gun Amnesty Program is in effect until May 16, 2013 to protect non-compliant owners of non-restricted firearms from criminal liability while they take steps to comply with the licensing and registration requirements of the Firearms Act.  The amnesty however will not apply to a beneficiary who has never obtained a firearms licence.

So, what happens if a beneficiary does not want to get a licence and wants to dispose of the unwanted firearm?  They can: turn the firearm in to authorities for destruction, have the firearm deactivated, sell or give the firearm to someone that has an appropriate licence or to a firearms dealer, give the firearm to a gun club or firearms instructor for use in firearms training if the individual has an appropriate licence or, if the firearm has historical significance it could be given to a museum.

Lesson Learned:  A testator/testatrix should speak to a beneficiary before leaving a gift of a firearm because it is not a simple gift as was probably intended.

Until next time,