It has been brought to our attention that an article in our mid-February issue entitled, If Planholder names beneficiary, creditors out of luck, was misinterpreted by some insurance advisors to mean that non-insurance RRSPs are now protected from creditors during the planholder’s lifetime if he or she names a beneficiary.

The article reported on the Supreme Court of Canada’s decision not to grant an appeal of an Ontario Court of Appeal decision known as Amherst Crane vs. Perring.

As the article pointed out, the OCA decision dealt solely with protecting the proceeds of an RRSP, upon the death of the planholder. If a beneficiary is named, the proceeds will be protected from the claims of creditors. Otherwise, they will pass unprotected to the estate.

The OCA compared RRSP proceeds with life insurance proceeds passing to a spouse. However, it did not refer to life insurance-based RRSPs, which are protected from creditors during the planholder’s lifetime, so long the designated beneficiary falls within a specified family relationship to the insured. In Ontario, this would include a spouse, same-sex partner, child, grandchild or parent.

As was also stated in the article, this is an Ontario court decision and only represents the law in Ontario. However, it could have persuasive value for courts in other provinces.

A link to the original story appears below.