What Happens to an RESP's Tax Treatment When the Subscriber Dies?

A Registered Education Savings Plan is opened by a "subscriber" — usually a parent or grandparent — to save for a child's education, with growth inside the plan sheltered from tax while it stays invested. Families rarely think about what happens to that plan if the subscriber dies before the child finishes school. The RESP subscriber dies tax question turns out to depend heavily on one detail: whether the plan had a joint subscriber.

This article explains the two main paths an RESP can take after a subscriber's death, and where the tax exposure sits in each.

RESPs Aren't Like an RRSP or a TFSA

It helps to start with a key difference. Registered accounts like RRSPs and TFSAs generally let the account holder name a specific beneficiary, and those named-beneficiary assets typically pass directly to that person outside of the estate and outside probate. An RESP doesn't work quite that way — a "beneficiary" of an RESP is the student the plan is meant to benefit, not someone with an ownership claim on the account itself. Ownership and control of the plan sit with the subscriber.

That distinction matters enormously for what happens when a subscriber dies.

Path One: There Is a Joint Subscriber

Many RESPs — particularly ones opened by a couple — are set up with two joint subscribers, most often spouses. If one joint subscriber dies, the surviving joint subscriber generally continues to own and control the plan without interruption. The plan keeps growing tax-sheltered, contributions can generally continue, and nothing about the RESP's tax treatment needs to change on account of the death.

This is the simplest outcome, and it's one reason financial institutions often recommend joint subscribers for RESPs opened by couples in the first place.

Path Two: There Is No Joint Subscriber

Where the deceased was the sole subscriber, the RESP itself becomes an asset that generally forms part of the deceased's estate. What happens next typically depends on the deceased's will and the specific RESP provider's rules:

1. The executor may be able to become the new subscriber, continuing the plan for the intended beneficiary, if the will and the plan's terms allow it.
2. Alternatively, the plan may need to be collapsed, particularly if no one is willing or able to step in as the new subscriber, or if the will directs that the RESP funds be distributed rather than continued.

If the plan is collapsed rather than continued for the beneficiary's education:

• Government grant money — such as the Canada Education Savings Grant — generally has to be repaid to the government. It was paid on the condition the funds would be used for the beneficiary's education.
• Contributions the subscriber originally put in can typically be returned without being taxed again, since they were made with after-tax money.
• Accumulated investment income inside the plan that isn't paid out as an educational payment to the beneficiary can become taxable when it's paid out to someone else, such as the estate — this is a different result than if the same growth had gone to the student as an intended educational payment.

Why the Estate's Plan Matters Here

Because an RESP with no joint subscriber generally flows through the estate rather than around it, it becomes subject to the same estate administration questions as other estate assets — including whether it factors into the Estate Administration Tax (probate) calculation, and whether the executor needs to account for it alongside the rest of the estate before distributing anything to beneficiaries.

Families who want to avoid uncertainty here are generally better served by naming a joint subscriber during the original subscriber's lifetime, or at minimum, making sure the will specifically addresses what should happen to any RESP the person holds.

Frequently asked questions