To be prepared for the rising costs of post-secondary education, be sure to discuss the benefits of opening a Registered Education Savings Plan with your independent financial advisor. RESPs are a great way to save for your children's education and realize the following benefits:

• Investments compound tax-free as long as they remain in your RESP;
• You choose your holdings from a wide range of options;
• Withdrawals are taxed in the hands of the student; and,
• The Canada Education Savings Grant contributes up $500 annually (See Government Grants).

As a student starts to take money out of the RESP to pay for post-secondary schooling, withdrawals are taxed in his or her hands - not yours. Since most students have much lower incomes than their parents, this "income splitting" should result in significant tax savings.

Top five 5 RESP tips...

1. Talk to a financial advisor about whether an individual or family RESP is more appropriate for you. This distinction relates to blood relationships and can be confusing.
2. Take advantage of carry-forward Canada Education Savings Grants. Contribution room accumulates from your child's birth, even if you haven't set up an RESP.
3. Don't withdraw RESP contributions before your child starts a post-secondary program. This triggers partial repayment and suspension of grant contributions.
4. Consolidate your RESPs for a single child so you can carefully monitor contributions.
5. Have a back-up plan in case your child decides not to pursue post-secondary schooling. If an RESP is 10 years or older, and the beneficiary has still not enrolled in a post-secondary program by age 21, you can withdraw the income earned from your contributions and transfer up to $50,000 to your RRSP. However, you will have to pay back Canada Education Savings Grants, the Additional CESG, CLB and ACES grants, if applicable. If you do not contribute the earnings to your RRSP, they are subject to regular income tax and a 20% penalty.

The fine print...

• As of 2007, there is no longer an annual contribution limit, so any amount to a lifetime maximum of $50,000 for each beneficiary is allowed.
• Educational Assistance Payments (EAPs) are amounts paid out to a beneficiary once that beneficiary is enrolled full-time or part-time at a designated educational institution. A part-time student is required to spend at least 12 hours per month on courses.
• All funds in the RESP must be withdrawn before the end of the plan's 36th year, although in some special cases, the RESP can remain open for as long as 41 years.