Creditor Protection

Money held in an RESP is generally not protected against creditors of the subscriber.

An RESP is an investment of capital made by the subscriber and remains under the control of the subscriber with the intent that it goes to the beneficiary if and when the beneficiary attends a post-secondary educational program. The RESP can be collapsed by the subscriber at any time prior to that. This means that a creditor of the subscriber can have access to all assets of the RESP, other than government subsidies, that belong to the subscriber.

Creditor protection for an RESP is generally not available, even for an RESP with an insurance company. This is because the Income Tax Act (Canada) requires that the RESP trust be the contract beneficiary, and therefore, creditor protection under the provincial insurance legislation is not available.  Exceptions apply in Alberta, where RESPs have been added to the list of exempted assets, when used for post-secondary education purposes.