Canadian Hearing Care - Senior Connector

September 2005 Senior Connector www.seniorconnector.com Page 13Financial FocusChoosing to help fund grandchildren’s educationSubmitted by Lili Seery ofEdward JonesOne of the best gifts agrandparent can give agrandchild is helping to payfor a university or collegeeducation.If you’re a grandparentconsidering helping out witheducation expenses, makesure you choose the rightvehicle for your contribution.This will help the moneyyou put toward educationgrow faster, as well as minimizetaxation.Contributing to a RegisteredEducation SavingsPlan (RESP) for yourgrandchild is the bestapproach. But dependingon the circumstances, theremay be other options worthexploring.When it comes to anRESP, a grandparent canopen up a plan with thechild as a beneficiary. However,because the parentsmay already have an RESPfor their child, it may makemore sense to contribute toan existing plan.If parents don’t makefull contributions each year,there is an opportunity forgrandparents to make up thedifference. Not only will thishelp maximize the level ofannual contributions, it willensure the RESP is eligiblefor the maximum CanadaEducation Savings Grant(CESG) of up to $500 ayear.A grandparent can giftmoney to the child’s parents,who can then make thecontribution on their behalf.And doing it this way caneliminate the confusion thathaving more than one RESPfor a child can create.If grandparents doopen a separate RESP fora child, they need to exercisecaution. If parents andgrandparents have plans,total contributions need tobe carefully monitored toensure the allowed maximumsare not exceeded.Another concern forgrandparents opening anRESP is the possibility thatthe child will not furtherhis or her education. Undercertain circumstances thegrowth of the funds in theRESP can be transferredback to the contributor’sRegistered Retirement SavingsPlan (RRSP) if a childdoesn’t go to college oruniversity. But a grandparentmay be beyond RRSPage, and funds cannot betransferred to a RegisteredRetirement IncomeFund (RRIF). This meansreturned amounts could beheavily taxed.However, according tothe Canada Revenue Agency,a grandparent who opensan RESP for a grandchildcan transfer the plan to ason or daughter’s RESP forthe same child. This meansthe money could be movedBCAA Travelto the parent’s plan, and theparents could then move thegrowth to an RRSP-subjectto their available currentand past contribution roomand a $50,000 lifetime maximum.Grandparents canalso open a family RESP,through which they canname their grandchildrenas beneficiaries. If one ormore children choose notto attend a post-secondaryinstitution, other grandchildrencan use the money, upto certain maximums.If there is no availablecontribution room in achild’s RESP, grandparentsmay want to consider an intrustaccount. This is a typeof informal trust set up toallow an adult to managefunds on behalf of a child.When the child reaches theage of majority, he or shetakes control of the funds inthe trust.An in-trust account,which can be set up ata financial institution, isa good way to contributeamounts beyond thoseallowed by an RESP. Thereare no contribution limits,although unlike an RESPthere is no tax deferral.However, if set up correctly,taxes can be managed byhaving capital gains taxed inthe hands of a child-whosetax liabilities will be nonexistentor small.There are some potentialCompetition for hotel space escalates as constructiondisplaces hotel guests, says BCAA TravelSubmitted by Gina Regush,Travel Manager (Kamloops)Book early and don’t expectlast-minute deals. That’s thetip on Waikiki, Hawaii thisyear, according to BCAATravel. With a surge ofrenovation and constructionprojects on the horion,room availability will beparse during peak periods,redicts BCAA Travel.Hawaii has been upgradingtheir accommodationproperties for a number ofyears, moving away from thetraditional full-service hotelsto more timeshare units andresort condominiums. Themost intensive constructionhub is Waikiki’s eight-acrebeach walk. The $460 milliondevelopment has closedseveral hotels popular withCanadians such as the OhanaReef Towers and WaikikiVillage. Once completed,the area will boast a vibrantshowcase of hotel accommodation;in the short-termhowever, its bad news forvisitors seeking last-minuteaccommodation - over 1600rooms will be out of serviceuntil late 2006.During peak travelseasons, this could meaninflated price tags for hotelaccommodation, warnsDale Urquhart, Manager ofBCAA Retail Travel ProductDelivery. “Book early if youhave specific dates in mindand avoid waiting for lastminutedeals. This wait-andwatchtactic is sure to backfirethis year, as the remainingspace will be set at premiumlevels. Worse still,customers could risk missingout completely.“For the lowest prices,try to schedule your stay forafter Labour Day throughto the first part of Decemberwith the exception ofThanksgiving, which traditionallyis very busy. Also, ifyou want to be assured youare getting value for yourdollar, there is no betterway than consulting a certifiedtravel specialist – theycan recommend propertiesand dates that offer the bestvalue.disadvantages. The donor istaxed on interest and dividendsearned in the plan.Once the child has controlof the money it can be usedfor any purpose-not justeducation. And an in-trustaccount does not qualify forthe CESG.Edward Jones is a memberof the Canadian InvestmentProtection FundFamily Restaurantat the KamloopsTravel Centre1885 West Trans Can HwyVER08_coupThe present is the ever-moving shadow that dividesyesterday from tomorrow. 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