Exempt items

I read that in the consumer proposal the following items are exempt:

Most pension plans, life insurance policies, and certain RRSPs.

Which RRSPs?
Life insurance: is Cash Surrender Value exempt?
What about RESP?

Posted from: Ontario

One Response to “Exempt items”

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

A consumer proposal is different than the filing of a bankruptcy in that there is no automatic vesting of non-exempt assets. Meaning you do not automatically loose the non-exempt items. However, he non-exempt property indirectly has to be considered as the bankruptcy legally must offer more to the creditors than would be available in the bankruptcy.

In terms of the treatment of the assets listed it is important to contact a local trustee as they will need to examine the policy documents of the investments to be able to tell you for sure, but as a general rule you will find:
a) All RRSP’s are subject to the 12 month claw back, so regardless of the type of policy all contributions are protected except for the contributions made in the last 12 months;
b) The cash surrender value of life insurance policies are considered non-exempt; and
c) All RESP’s are non-exempt and lost if a bankruptcy is filed.