Maria owns a segregated fund contract and has designated her adult son, Carlos, as the revocable beneficiary. If Maria were to declare bankruptcy, how would the segregated fund typically be treated under Canadian law?

Question: Maria owns a segregated fund contract and has designated her adult son, Carlos, as the revocable beneficiary. If Maria were to declare bankruptcy, how would the segregated fund typically be treated under Canadian law?

Answer options:

• It would be fully protected from creditors due to the beneficiary designation.
• It would be protected only if Carlos was an 'irrevocable' beneficiary. ✅ It would generally be available to creditors, as Carlos is a revocable beneficiary.
• It would be frozen until Maria's death, then paid to Carlos.

Correct answer: It would generally be available to creditors, as Carlos is a revocable beneficiary.

Explanation: In Canada, segregated funds with a revocable beneficiary designation (other than a family class beneficiary in some provinces) are generally not protected from creditors during the annuitant's lifetime and would be available to creditors in the event of bankruptcy.