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Redeemed exemptions

Once an asset is considered exempt ie. $40,000 equity in a home, or RRSP in a segregated fund with an insurance company; are the funds also considered exempt if redeemed (the house is sold, the RRSP`s are cashed, life insurance cash value is taken, etc.?

Posted from: Alberta

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One Response to “Redeemed exemptions”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

The case law on this issue to support both the argument for seizing the funds if the nature of the asset is not preserved during a bankruptcy, but also an argument for preserving the exemption despite the converted nature.

As a result there is some discretion that the trustee must employ. The approach I take is that once you have claimed that exemption you retain it, so if you sell your house part way through the bankruptcy the money is still protected.