Fact Sheet - Creditor Protection
Originally posted on Jun 02, 2012
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There are some misconceptions on whether RRSPs are creditor protected. So, let's set the record straight. In some Canadian provinces such as Alberta, Ontario, Quebec, New Brunswick and Nova Scotia, RRSP assets are not protected from the claims of creditors unless they are held under an insurance contract issued by a life insurer and there is a designated beneficiary on record with the insurer.
Moreover, even where RRSPs enjoy protection under the Bankruptcy and Insolvency Act, that protection does not apply to contributions made in the 12 months prior to the bankruptcy date.
By contrast, all monies in pension plans, such as the INTEGRIS PPP, are protected by provincial pension legislation whether in the normal course of business or even after a bankruptcy date.
In light of the new tax rules that penalize passive investments within CCPCs, advisors must understand how pension legislation can become a powerful tool to deal with wealth succession, business succession, and tax optimization within a corporate environment.
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