Patricia designates her common-law partner, David, and her brother, Michael, as equal beneficiaries of her segregated fund contract. Her province's Insurance Act permits 'family class' beneficiary protection for common-law partners. If Patricia faces significant creditors and had designated both as revocable beneficiaries, how would the segregated fund be treated?

Question: Patricia designates her common-law partner, David, and her brother, Michael, as equal beneficiaries of her segregated fund contract. Her province's Insurance Act permits 'family class' beneficiary protection for common-law partners. If Patricia faces significant creditors and had designated both as revocable beneficiaries, how would the segregated fund be treated?

Answer options:

• The entire fund would be protected from creditors. ✅ The portion designated to David would be protected, but the portion to Michael would be accessible by creditors.
• Neither portion would be protected because Michael is not a 'family class' beneficiary.
• Creditors would have access to 50% of the fund, regardless of the beneficiary type.

Correct answer: The portion designated to David would be protected, but the portion to Michael would be accessible by creditors.

Explanation: Creditor protection for segregated funds depends on the beneficiary designation and provincial laws. While a common-law partner (family class) might provide protection for their share, a non-family beneficiary like a brother typically does not, making that portion accessible to creditors.