Tag: insurance policy

05 Jul

How Can Life Insurance Supplement an Estate Plan?

Nick Esterbauer Beneficiary Designations, Elder Law Insurance Issues, Estate Planning Tags: , , , , , 0 Comments

Life insurance can be a useful tool in estate planning to offset tax liabilities and supplement the assets that may otherwise be available to leave to a surviving spouse or other family members.

An article by Michael Grob, featured in the most recent issue of the Step Journal, highlights the potential of life insurance in estate planning, with a focus on the utility of insurance within the context of high net worth individuals who have assets in multiple jurisdictions.

business, document, proposal, marketing, pen, office, desk, notepadLast year, the Canadian Life and Health Insurance Association released statistics from 2014, which suggests that the size of Canadian life insurance policies continues to grow, despite prolonged low interest rates and slower than average investment growth.  During 2014, the value of life and health insurance policies increased by 11.5% to $721.2 billion.  While these figures suggest that the use of life insurance in estate planning is increasing, Mr. Grob states that it is less commonly used to its potential in the cross-border context.

There are many reasons why life insurance policies are such an effective estate planning tool, and why they may be especially suitable when cross-border issues may also present themselves.  These reasons, which are highlighted within Mr. Grob’s article, can be summarized as follows:

  • Availability of liquid funds available for use by an estate upon death, including for the satisfaction of foreign taxes and/or inheritance tax, where there may otherwise be complications in obtaining probate that will delay the payment of these estate liabilities;
  • Tax concessions generally associated with life insurance (in Canada, life insurance proceeds are not typically taxable, nor are they normally subject to probate fees when a designated beneficiary other than the estate is identified);
  • Accessibility to life insurance in other jurisdictions, even if local access is limited, through international providers;
  • Variety of different options regarding policies and their terms; and
  • Equalization of inheritances left to survivors; for example, in circumstances in which a business will be left to one child and the testator wishes to establish a life insurance policy to benefit the other(s) or to provide a corporation with sufficient funds to buyout the business interests left to one or more shareholders.

With all of the benefits associated with the use of life insurance policies, it is important to consider the potential of life insurance in achieving clients’ objectives when assisting them with estate planning.

Thank you for reading.

Nick Esterbauer

07 Apr

The Role of Section 72 in the Succession Law Reform Act

Noah Weisberg Beneficiary Designations, Estate Planning, Joint Accounts, Pension Benefits, RRSPs/Insurance Policies Tags: , , , , , , , , , , 0 Comments

For my ‘Thursday Throwback’ post, I turn to an important 1981 decision from the High Court of Justice considering section 72 of the Ontario Succession Law Reform Act.

0DU466L58GIn Moores v. Hughes, an application was brought by a divorced wife for dependant support pursuant to Part V of the SLRA.
As a result of certain debts owing at the time of the Deceased’s passing, his net estate amounted to $40,000.  However, as there were assets that passed outside of the Deceased’s Estate in the approximate amount of $365,000, comprised primarily of insurance policies, a joint bank account and a pension plan, a thorough analysis of section 72 of the SLRA, was undertaken.  A helpful Hull & Hull LLP podcast on section 72 assets can be found here.

Often referred to as the ‘claw back’ provision, section 72 deems certain transactions to be included as testamentary dispositions as of the date of death and included in the value of an estate and available to be charged for payment for dependant support purposes.  As the addition of section 72 had only recently been enacted, Justice Robins stated that the, “…section makes a significant change in the law as it stood before the enactment of the Succession Law Reform Act…Manifestly, the section was intended to ensure that the maintenance of a dependant is not jeopardized by arrangements made, intentionally or otherwise, by a person obligated to provide support in the eventuality of his death”.

Based on the Court’s interpretation of the (then) newly enacted section 72, the insurance policy, joint bank account, and pension plan, were all included in the estate and thus made available for dependant support.

Despite this interpretation, there remains estate planning techniques available to ensure that certain jointly held life insurance policies fall outside of the claw back provision of the SLRA, as addressed in the Ontario Court of Appeal decision in Madoire-Ogilvie (Litigation Guardian of) v. Ogilvie Estate.

Noah Weisberg

20 Apr

The Svalbard Global Seed Vault: The Ultimate Insurance Policy

Hull & Hull LLP General Interest, In the News Tags: , , , , , , , , , , , , , 0 Comments

The Svalbard Global Seed Vault (SGSV), also known as the Doomsday Vault, is a secure seedbank located on a Norwegian island far within the Arctic Circle. The purpose of the SGSV is ‘to provide insurance against both incremental and catastrophic loss of crop diversity held in traditional seed banks around the world.’

The safety of the world’s 1,400 crop diversity collections has been a concern for many years due to risks including poor agricultural management, equipment failures, war, underfunding and natural disasters. The SGSV provides a duplication of seed samples stored in genebanks worldwide, acting as a sort of agricultural ‘spare tire’, if you will.

The SGSV was entirely funded and built by the Norwegian government and took its first delivery of seeds just over a year ago. The vault is situated 390 feet inside ‘Platåberget’, a sandstone mountain on Spitsbergen Island chosen based on its tectonic inactivity. Inside the vault, the seeds are sealed in specially designed four-ply foil packages, which are then placed inside sealed boxes and stored on shelves inside storage rooms. Refrigeration units (powered by locally mined coal) cool the seeds to –18 degrees Celsius, and in the event of equipment failure, it would take weeks for the temperature to even reach that of the surrounding sandstone. The area’s natural permafrost would further prevent the samples from thawing. Even in worst-case climate change modeling, the vault rooms will remain naturally frozen for up to 200 years. Estimates suggest that the SGSV has the ability to conserve a capacity of over 2 billion seeds for hundreds, if not thousands of years.

Now, how’s that for global estate planning?

Jennifer Hartman, guest blogger

08 Apr

Insurance Trusts and Estate Administration Tax

Hull & Hull LLP Estate & Trust Tags: , , , , 0 Comments

As a segue from yesterday’s blog (which considered the issue of beneficiary designations of life insurance policies), today’s blog considers issues arising from the characterization of life insurance proceeds as trust assets in the context of an overall estate plan. Life Insurance Trusts can be created for specific purposes where the owner of the policy has clearly defined testamentary intentions respecting the use of the funds.

In his recent presentation at the Six-Minute Estates Lawyer, Robin Goodman noted a recent Saskatchewan case, Re Carlisle Estate, in which the Court considered whether a declaration in a Will creating a life insurance trust had the effect of excluding the proceeds from probate under Saskatchewan legislation. In that case the Court determined that, regardless of a clearly stated intention to the contrary, the appointment of the executor of the estate as the trustee of the insurance trust (and, more importantly, as the designated beneficiary of the insurance proceeds) meant that “no exemption from probate fees can be claimed.” However, in a gloss on this case, the decision in Sun Life Assurance Co. of Canada v. Taylor (also a Saskatchewan case) clarified that, where the insurance proceeds did not vest in the executor as beneficiary (albeit as trustee for others) but, instead, were simply held by the executor in trust for the designated beneficiaries, the insurance proceeds were not to be considered as estate assets.

As Goodman notes in his paper, it is not clear how these decisions will impact the law in Ontario. In any event, the decisions serve to give any estate planner pause to consider how best to structure an insurance trust whether inside or outside of a Will.

David M. Smith

 

 

12 Feb

Pre-probate Checklist – Hull on Estate and Succession Planning #99

Hull & Hull LLP Estate & Trust, Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, TOPICS Tags: , , , , , , , , , , , , , , , , , , , , , , , , 0 Comments

Listen to Pre-probate Checklist

This week on Hull on Estates, Ian and Suzana discuss last week’s Ontario Bar Association Conference (featuring Clare Burns and Jordin Atin as speakers).

They then wrap up their ongoing discussion about some useful steps to remember when administering an estate.

If you’d like to leave a comment, call us on our comment line at 206-457-1985 or leave us an email at hullandhull@gmail.com or you can visit our blog at estatelaw.hullandhull.com/.

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22 May

Using Insurance Instruments for Effective Succession Planning – Hull on Estate and Succession Planning Podcast #61

Hull & Hull LLP Hull on Estate and Succession Planning Tags: , , , , , , , 0 Comments

Listen to "Using Insurance Instruments for Effective Succession Planning"

Read the transcribed version of "Using Insurance Instruments for Effective Succession Planning"

During Hull on Estate and Succession Planning Episode #60, Ian and Suzana discuss how  term policies and whole life policies can apply to succession planning.

They cover three important aspects to consider when reviewing your insurance policies, especially in a separated spouse situation including the funding of support obligations, the designation of the policy’s beneficiaries, and how the policy will be funded after death.

03 Apr

Estate Planning Considerations in the Context of Married and Unmarried Spouses – Hull on Estate and Succession Planning Podcast #54

Hull & Hull LLP Beneficiary Designations, Funerals, Hull on Estate and Succession Planning, Hull on Estate and Succession Planning Tags: , , , , , , , 0 Comments

Listen to "Estate Planning Considerations in the Context of Married and Unmarried Spouses"

Read the transcribed version of "Estate Planning Considerations in the Context of Married and Unmarried Spouses"

During Hull on Estate and Succession Planning Episode #54, Ian and Suzana discuss how to avoid Will drafting problems when creating beneficiary designations for insurance trusts.

They also discuss the importance of including funeral arrangements in your Will, and the various Provincial approaches to the revocation of wills after marriage and after a divorce.

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