The bankrupt transferred funds from his non-exempt RRSPs into an exempt RRIF (a life insurance annuity) and designated his wife as beneficiary prior to declaring bankruptcy.
The appellant creditor sought to attach the RRIF, arguing the transfer was a void settlement under s. 91 of the Bankruptcy and Insolvency Act.
The Supreme Court of Canada held that while the designation of a beneficiary is a settlement that is void against the trustee under s. 91, the RRIF remains exempt from the claims of creditors under s. 67(1)(b) of the Act and provincial insurance legislation.
The two provisions operate at different stages of bankruptcy: s. 91 brings property into the trustee's possession, while s. 67(1)(b) prevents the trustee from dividing exempt property among creditors.
