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RESP or In-Trust For (ITF) Account
– Which to Choose?
October 19, 2019

Suppose you or your parents decide to put aside money for your child in the child’s name. Or what if a child who is a minor receives an inheritance that you think should be invested for the child’s future.

One investment option is a Registered Education Savings 
Plan (RESP). Created by the federal government, an RESP helps you save more effectively for post-secondary education by allowing tax-free growth inside the plan and by topping up your savings with government grants.

Another option is an in-trust fund (ITF) account. An ITF is an “informal trust” you can create at a financial institution to invest funds on behalf of a minor. The account is set up as a trust because children under the age of majority cannot enter into binding financial contracts, nor can they accept a gift under a will. You or another adult is then responsible for investing funds for the child and signing the contract on the child’s behalf.

An ITF is good choice for special situations like the one described above. It can also be used as a second investment vehicle to be used to save for post-secondary education after you’ve already maxed out your RESP contribution room.

While RESPs and ITFs are essentially equal when it comes to investing options and who can contribute, there are many important differences in terms of control, ownership, flexibility, grant availability and especially taxation. Some of the key differences are detailed in the chart below.
Additional Information

Benefits of an RESP

  • Up to $7,200 in Government Grants
  • Tax-Sheltered Growth
  • Flexible Investment Options
  • Tax Savings

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Useful Tools and Information

Get Started
Get started by estimating the expenses your children will incur during their post-secondary school years. Keep in mind that the cost of tuition, housing, books and incidentals continues to rise, so you must adjust your figures for anticipated inflation. Through this process, you can quite accurately determine the monthly, yearly or one-time deposit required to fund the future costs of education.
Education Planning Calculator
Next, you need to decide on the best investment vehicle to reach your savings goals. The most popular educational savings vehicle today is the Registered Educational Savings Plan, or RESP, as it is commonly known. You also have other options, including an In-Trust Account and a Scholarship Trust Fund.

Read through the information and if you have any specific questions send us an email and we would be pleased to help.
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