Are RESPs Included in Divorce Settlements? Why the Ruling in Lau v. Tao (2025) Changes Everything for Ontario Parents
In Ontario, RESPs are generally considered property of the subscriber and included in Net Family Property for equalization. However, the ruling in Lau v. Tao (2025) confirms that specific mandatory language in a separation agreement can create a valid trust, excluding these funds from property division.
In This Guide
Understanding RESP ownership in Ontario divorce
The "Three Certainties" required to prove a trust
How the 2025 ONCA 819 ruling changed the legal landscape
The critical difference between "shall" and "must"
Practical steps for parents at the Brampton Davis Courthouse
2026 updates for Federal Child Support Tables
Local Legal FAQ for Peel Region residents
How do I protect my child's RESP during a divorce in Brampton?
The fate of a Registered Education Savings Plan (RESP) is a major concern for parents in Peel Region. Most people assume these funds belong to the children. Under Ontario law, this is rarely the case. The subscriber owns the account. This means the money is usually part of your Net Family Property (NFP). If you are the subscriber, you must list the RESP value on your Form 13.1 Financial Statement.
We see this issue constantly at OMNI LAW GROUP. Parents want to ensure their children’s education is funded. They do not want the RESP used to pay out a former spouse. The recent 2025 ruling in Lau v. Tao has provided a new level of clarity on how to achieve this.
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The General Rule: RESPs as Net Family Property
In most Brampton divorce cases, the parent who opened the RESP is the owner. They have the power to withdraw the capital. They can even close the account. Because of this control, the law treats the RESP like any other bank account. It is an asset to be equalized.
If you and your spouse are joint subscribers, the value is split. If only one of you is the subscriber, that person holds the full value in their NFP. This can lead to a significant equalization payment. It often feels unfair to parents who saved for years.
The Trust Exception: The "Three Certainties"
There is a way to keep RESPs out of the equalization pot. You must prove the RESP is held in a "valid trust" for the children. This is a high legal bar. To succeed, you must demonstrate the "Three Certainties" established in Canadian law:
Certainty of Intention: You must show a clear legal obligation to use the money for the children. A moral hope or "good intention" is not enough.
Certainty of Subject Matter: You must clearly identify the specific property (the specific RESP account).
Certainty of Objects: You must clearly identify the beneficiaries (the children).
Without these three elements, the court will likely rule that no trust exists. The funds will remain in the property pot for division.
Why Lau v. Tao (2025) Changes Everything
The Ontario Court of Appeal (ONCA) recently addressed this in Lau v. Tao, 2025 ONCA 819. This case is now a cornerstone for any Family Lawyer in Brampton. The dispute centered on whether certain funds, including RESPs, should be excluded from equalization.
The court looked closely at the language used in the parties' Separation Agreement. The agreement stated: "The RESPs maintained by the parties shall be used for the children’s postsecondary education."
The word "shall" was the turning point. The court ruled that this mandatory language created a legal obligation. It was not a suggestion. It was a binding requirement. This successfully satisfied the "Certainty of Intention." Consequently, the RESPs were deemed to be held in trust. They were excluded from the equalization calculation entirely.
Drafting Matters: The Power of "Shall" vs "May"
The lesson for Ontario parents is clear. Your choice of words in a Separation Agreement is vital. If you use permissive language like "the parties may use the RESP for education," you are likely leaving the door open for equalization.
At OMNI LAW GROUP, we emphasize precision. If your goal is to protect education savings, your agreement must use mandatory terms. "Shall" or "Must" are your strongest tools. This is especially relevant in 2026 as we see more complex financial structures in Brampton divorce cases.
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Managing Your Case at the Davis Courthouse
If you are filing for divorce in Brampton, your matter will likely be heard at the A. Grenville and William Davis Courthouse. Dealing with property division here requires a strategic approach. The courthouse is located at 7755 Hurontario Street.
Be prepared for long security lines. Ensure your financial disclosures are complete before your first appearance. We often represent clients who are navigating both family disputes and criminal charges. This "Double-Threat" reality is common in Peel Region. Our office on North Park Drive is minutes away from the courthouse. We provide a unified defence for those facing domestic assault charges and contested divorces.
2026 Federal Child Support Table Updates
It is important to remember that RESPs are separate from child support. As of the 2026 Federal Child Support Table Updates, payment amounts have shifted to reflect current economic conditions in Ontario.
While child support covers daily needs, postsecondary education is often considered a "Section 7" extraordinary expense. If an RESP is held in trust, it is usually used first to cover these costs before parents are asked to contribute additional funds.
Quick Facts: RESPs & Divorce
Subscribers Rule: The person who opens the account is the legal owner.
Equalization: RESPs are usually included in Net Family Property.
The "Shall" Rule: Mandatory language in an agreement can create a trust.
Form 13.1: You must disclose all RESPs on your financial statement.
Section 7: RESPs are typically applied to postsecondary costs before parents pay more.
Local Logistics for Brampton Parents
Navigating the legal system in Brampton involves more than just the courtroom. You may need to interact with the Peel Regional Police or the Peel Children’s Aid Society (CAS) if your separation is high-conflict.
If there are criminal allegations alongside your divorce, you need a Criminal Defence Lawyer in Orangeville or Brampton who understands family law. A domestic charge can impact your parenting time and your property rights. OMNI LAW GROUP handles the intersection of these two worlds every day.
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Local Legal FAQ
Can my ex-spouse withdraw money from our child's RESP without my permission?
In Ontario, if your ex-spouse is the sole subscriber, they technically have the legal right to withdraw funds. However, if your Separation Agreement or a Court Order states the funds are for the children, a withdrawal could lead to a breach of contract or contempt of court. If you are joint subscribers, most financial institutions require both signatures for a withdrawal. It is critical to notify your bank immediately upon separation. At OMNI LAW GROUP, we often seek interim orders to freeze RESP accounts until a final settlement is reached at the Davis Courthouse.
How do I prove the RESP was a gift from my parents in a Brampton divorce?
This follows the principles of tracing mentioned in Lau v. Tao. You must show that the funds originated from your parents as a gift specifically to you or the child. You need clear bank records showing the transfer from their account to the RESP. If the money was a gift to you alone, you might be able to exclude the capital portion from your Net Family Property. However, growth and interest are usually shareable. Having a written gift letter from your parents at the time of the contribution is the strongest evidence you can provide.
Will the court force us to use the RESP before paying for university in 2026?
Generally, yes. Ontario courts view RESPs as the primary fund for a child's postsecondary education. When calculating Section 7 expenses, the court will typically apply the RESP funds to the tuition and residence costs first. The parents are then responsible for the "remaining" balance in proportion to their incomes. This is why the 2025 ruling in Lau v. Tao is so important. By ensuring the RESP is a "trust," you guarantee it is used for the child rather than being swallowed up in the general equalization of debts and assets.
ABOUT THE AUTHOR
Rahul Kaushal is the Co-founder of OMNI LAW GROUP. He is a dedicated member of the Law Society of Ontario with extensive experience in the intersection of Family and Criminal law. Rahul focuses on providing practical solutions for clients navigating the Davis Courthouse and the Orangeville Courthouse. Alongside Co-founder Vaneet Sangha, he leads a team at OMNI LAW GROUP committed to being a one-stop legal solution for Brampton families.
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