In order for a Segregated Fund to provide potential protection from creditors, which condition must typically be met?

Question: In order for a Segregated Fund to provide potential protection from creditors, which condition must typically be met?

Answer options:

• Every segregated fund is automatically exempt from all creditors.
• Creditor protection only applies if the owner is insolvent at the time of purchase.
• The owner must be a corporation for protection to apply. ✅ A family class or irrevocable beneficiary must be named.

Correct answer: A family class or irrevocable beneficiary must be named.

Explanation: For a Segregated Fund to potentially qualify for creditor protection, the beneficiary must be of a specific class (spouse, child, parent, or grandchild) or be an irrevocable beneficiary. This protection is provided under provincial Insurance Acts.