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Email this5:03 pm
December 23, 2011
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In reviewing with a friend about Succssor vs Beneficiary, he sent me a newspaper clipping that also mentioned about TFSA's not being creditor protected.
I found the following information that may be interesting for those who may consider TFSA vs RRSP investing. And this is just good general knowledge that is good to have.
Our Government brought in legislation to allow creditor protection, in the case of a bankruptcy, of a person’s assets held in a Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) or a Deferred Profit Sharing Plan (DPSP). (There are some exceptions regarding assets added to the funds in the 12 months leading up to bankruptcy and in certain provinces regarding marital breakdown.) My understanding is that presently, money invested in Tax Free Savings Accounts (TFSA) is not protected from creditors (Although I’ve been told that TFSAs offered by insurance companies might provide creditor protection if the named beneficiary is a spouse, parent, child, or grandchild.)
7:03 pm
January 30, 2009
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Yes, everything you've said above is correct, Kanaka. If, however, a judge deems that you have deposited funds to your RRSP specifically for the purposes of evading a creditor, it is known as a fraudulent conveyance, and the creditor protection does not apply.
1:01 pm
April 6, 2013
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kanaka said
(Although I’ve been told that TFSAs offered by insurance companies might provide creditor protection if the named beneficiary is a spouse, parent, child, or grandchild.)
I wouldn't rely on that. I have reasonable doubts about the creditor protection provided by products from insurance companies.
Contrary to what I have been told before, there are cases where creditors have been successful in claiming against insurance products like life insurance policies. I wrote about one such case in this post.
In that case, an ex-wife successfully sued and obtained $150,000 of the $300,000 proceeds from a deceased's life insurance policy. The deceased had designated his current common-law wife as the beneficiary of that policy.
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