Creditor Protection in Quebec: complete guide 2026

Legal Basis

In Quebec, the exemption from seizure of insurance products rests on two sources:

• Article 2457 CCQ: the rights arising from an insurance contract are exempt from seizure when a beneficiary is designated and that beneficiary belongs to the "family" class (married or civil union spouse, descendant or ascendant of the policyholder; a common-law spouse is not included) • Insurance Act (CQLR c. A-32.1, s. 155): reinforces the exemption from seizure in the Quebec context

Important: the designation must have been made in good faith, BEFORE financial difficulties arise. A designation made in anticipation of imminent insolvency may be challenged under the Bankruptcy and Insolvency Act (ss. 91–96).

Segregated Funds and Creditor Protection

Segregated funds are insurance contracts. As such, they benefit from creditor protection when the beneficiary designation meets the requirements:

• Irrevocable designation: full protection against the policyholder's creditors • Revocable "family" designation (married or civil union spouse, ascendant, descendant): protection under art. 2457 CCQ • Revocable non-family designation: NO creditor protection

This is the key advantage of segregated funds over mutual funds, which offer no creditor protection. For a professional or entrepreneur exposed to lawsuits, this distinction can justify the higher cost of segregated funds.

RRSPs and Seizure Rules

RRSP seizure rules vary depending on the product type:

• RRSP held in a segregated fund: protected if the designation is appropriate • RRSP held in a mutual fund/GIC: in bankruptcy, contributions from the last 12 months are seizable. The remainder is generally protected under the Bankruptcy and Insolvency Act. • Outside bankruptcy: an RRSP not held in an insurance product can be seized by creditors

For maximum protection outside bankruptcy, the RRSP should be held in a segregated fund with an appropriate beneficiary designation.

Protection Strategies

For clients exposed to creditors (entrepreneurs, professionals, contractors):

• Prefer segregated funds for non-registered investments and RRSPs • Designate a family class beneficiary (married or civil union spouse, children) — for a common-law spouse, an irrevocable designation is required • Life insurance with an irrevocable designation for protection needs • Holding corporation to separate business assets from personal assets • Family trust in certain situations

The key is PLANNING: all these measures must be put in place BEFORE financial problems arise. Timing is decisive. Advise your clients not to wait.

Frequently Asked Questions