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Other ways to save for your child's education
If you're looking for alternatives to an RESP, you may wish to consider non-registered savings options to provide additional flexibility and growth potential. (Government grants do not apply.) Choose from:
In Trust Accounts
A simple way to save for future education costs is to open a regular (non-registered) investment account as an "in trust" account. We recommend that you consult with your lawyer or tax advisor before setting up an "in trust" account to ensure it meets your needs and objectives.
Two features of an "in trust" account can make it an excellent savings vehicle for a child's education:
- Unlike RESPs, there are no restrictions on the amount you can contribute on an annual or total basis
- Also, unlike RESPs, if the child does not pursue post-secondary education, the child may use the money for another purpose
Family Trusts
A family trust is a trust arrangement typically established by a formal trust agreement drafted by a lawyer. Although certain preferential tax treatment for such trusts has been eliminated in recent years, some advantages still remain and you may wish to discuss this option with a legal or tax advisor.
Scholarship Trusts
Available from independent associations, scholarship trusts operate much like an insurance fund. The income from all contributions is pooled into one large fund, and is paid out to eligible beneficiaries as they progress through post-secondary education. With this type of plan, a beneficiary may get more or less than their proportionate share of the pool.
Scholarship trusts often have restrictions. If the beneficiary does not attend a qualified post-secondary institution within certain time limits, the interest income is normally kept in the pool for the benefit of other beneficiaries. There also may be restrictions on changing beneficiaries. Consult with your legal or tax advisor.
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