In a previous post, I shared my approach for investing in an RESP, and I promised I’d show you how I share the funds therein between my kids.

To me, it didn’t seem fair to split the cash value of the RESP between the kids. My kids (I have two) started higher education at different times, years apart, and so needed the money at different times. The investments in the RESP continue to grow even after decumulation begins, so how to account for that?

The way I track it is in this Google Sheet.

The idea behind it is pretty simple. You create a “mutual fund” on the day the first withdrawal happens with a fixed number of units. (I used 1 unit = $1, but you could set your unit value to whatever you like). Then, each child (if you want to be fair) gets the SAME number of units on that day. Children sell their units as they request money from the RESP. The unit price fluctuates depending on the value of the RESP overall.

So say you have a $10000 RESP divided among 4 kids. On launch day, you create the fund and create 10000 units, each priced at $1. You give each of your 4 kids 2500 units on that day. On that day, that means they also each have $2500.

Kid #1 needs $5000 for tuition, and this means they spend 5000 units. That’s row 17 in the example sheet.

Time passes, and Kid 1 needs more money. The wisely-invested RESP continues to grow, and has nearly made back all the money that was removed from it, valued on December 1 at $99,800, which is entered in column B. The unit price has increased as a result, from $1 to $1.05 (that’s an automatic calculation).

So Kid 1 has 20,000 units, each worth $1.05. The other kids still have all 25000 units, but they are now worth more money, $1.05*25000 =$26,250.00. Kid 1’s $3000 request costs 2885 units thanks to the growth, and Kid 1’s unit balance is updated accordingly.

This continues on, and all you need to do is fill down more rows as you need them, entering the values in the yellow cells yourself. You can even withdraw for multiple kids on the same date.

I’ve been running our family RESP fund since August 2018; unit price was $1. I just completed a transaction for kid #2, and the unit value was $1.46. The last two years have been exceptionally kind to this fund.

If you have questions or comments on this method, hit me up at comments@moneyengineer.ca!