Tag: Life Insurance

19 Jul

Hull on Estates #476 – Life Insurance and Charitable Giving

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

This week on Hull on Estates, Natalia Angelini and Umair Abdul Qadir discuss life insurance in the context of two articles, namely, “That’s Life Insurance” by Michael Grob, published in the June 2016 edition of Step Journal (http://bit.ly/29Yoc3Z) and “Charitable Donations: A Summary of Tax Considerations” by James M. Parks, published in the Canadian Donors Guide 2016/17 (http://bit.ly/29SAkAF).

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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

27 Jun

Effecting an Insurance Designation by Declaration

Ian Hull Wills Tags: , , , , , , 0 Comments

What language will be sufficient to effect a beneficiary designation by codicil? The decision in The Bank of Nova Scotia Trust Company v Ait-Said, 2016 ONSC 4051 (Canlii) provides some guidance on this issue.

The Testator, Mr. Briggs, made a number of amendments to his will. In particular, he had had drafted a document (“the July 29, 2013 Document”) which referred to the contents of the safety deposit box. Only a photocopy of this handwritten document was located when the records were searched. The July 29, 2013 Document provided that the contents of the Testator’s safety deposit box were to be left to Ms. Lockhart, a respondent in the proceeding. This safety deposit box included within it life insurance policies. Mr. Brigg’s wife, Ms. Briggs, had been named the beneficiary of the policies but had predeceased him.

writing, paper, pen, hands, people, business, office, desk, working

It was Ms. Lockhart’s position that their inclusion in the box effected a declaration within the meaning of the Insurance Act, naming her beneficiary of the policies. She argued that the declaration in the holograph will should not be held to the same standard as that of a will prepared in accordance with the formalities of the Succession Law Reform Act, and that the wording of the document was sufficiently clear in its testamentary intentions to designate her as beneficiary of the policy.  The Estate Trustee, the Bank of Nova Scotia Trust Company, maintained that there was no valid declaration or intention to name Ms. Lockhart the beneficiary of the policies, and that the proceeds of the policies had to be distributed in accordance with the Insurance Act.

As a preliminary concern, the Court evaluated whether this document should be admitted to probate. The Court accepted on the evidence that the July 29, 2013 Document was admissible for probate despite it being a photocopy of a handwritten document.

In making a determination as to the beneficiary of the proceeds of the policies, the Court considered the words “the total contents of my safety deposit box.” It found these words were not sufficient to meet the requirements of the provisions of Insurance Act.  In its reasons, the Court stated that the document did not identify the insurance contract or the proceeds and dismissed Ms. Lockhart’s argument that there had been a valid declaration in her favour.

The Court also dismissed Ms. Lockhart’s argument that the Estate Trustee held the policies in trust for her. In doing so, it referred to the document’s emphasis on personal possessions within the safety deposit box and that in doing so the Testator likely did not intend to include the policies. The Court refused to find any fixed or final intention to leave the policies to Ms. Lockhart on this basis. The policies were therefore to be distributed in accordance with 194(1) of the Insurance Act to the Testator’s personal representative.

Thanks for reading.

Ian Hull

08 Jun

Richardson v. Mew Revisited

Suzana Popovic-Montag Beneficiary Designations, RRSPs/Insurance Policies Tags: , , 0 Comments

Richardson v. Mew is a significant decision of the Ontario Court of Appeal in the context of life insurance policies and claims alleging unjust enrichment.

Mr. Richardson had divorced his first wife, Ms. Mew, and had been required by separation agreement to have her designated the beneficiary of a life insurance policy until 1995. Thereafter, he had left the beneficiary designation unchanged.

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Soon after his second marriage, Mr. Richardson became incapable to manage his property.

Mr. Richardson’s second wife, Ms. Ferguson, acted under his power of attorney and, among other things, made payments of premiums on the insurance policy on his behalf.

On Mr. Richardson’s death, Ms. Ferguson sought the assistance of the Court, claiming Ms. Mew had been unjustly enriched.

The Court of Appeal found in favour of Ms. Mew. In its judgment, the Court found that the provisions of the Insurance Act constituted a juristic reason for Ms. Mew’s enrichment. As was previously blogged on this website, the trial judge had also considered rectification and whether Ms. Ferguson could have changed the beneficiary designation in her capacity as attorney for property. The rectification issue was not pursued before the Court of Appeal. The Court of Appeal agreed with the application judge that an attorney for property could not make what amounted to a testamentary disposition.

Thanks for reading.

Suzana Popovic-Montag

07 Jun

Hull on Estates #470 – Rectification Revisited

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This week on Hull on Estates, David Smith and Nick Esterbauer discuss the equitable doctrine of rectification and situations in which Ontario courts may be willing to rectify wills and life insurance beneficiary designations.

Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.

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09 Apr

Life Insurance as Property: Timing is everything

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

For my final blog of this week, I thought I would give further consideration to the unique legal issues arising out of life insurance beneficiary designations.

Because of the increasing complexity of insurance structures, it is not always easy to determine what "property" is held by a policyholder at the time of his death. The question is relevant when one considers that, in Ontario, Estate Administration Tax is levied on the value of "all property that belonged to the deceased at the time of his or her death." In this context, there is good reason to question when a contract between the deceased and his insurer morphs into a legal obligation owed by the insurer to the beneficiary.

While the contractual obligation between the deceased and his or her insurer has been described by at least one court as a "species of property", that property (if we are talking about term insurance) only realizes its true value after (as opposed to "at the time of") the death of the deceased policy owner. More than one commentator has noted that the value of term life insurance before the death of the deceased is arguably nominal.  However, in Re Carlisle Estate, discussed yesterday, the Court stated: "No one would suggest that the value of a winning lottery ticket is the price paid for the ticket.  The value of an insurance policy is the amount paid to the beneficiary by the terms of the policy."

Have a great long weekend!

David M. Smith

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

 

 

25 Mar

Madore-Ogilvie vs. Ogilvie Estate – Hull on Estates #103

Hull & Hull LLP Hull on Estates, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0 Comments

Listen to Madore-Ogilvie vs. Ogilvie Estate.

This week on Hull on Estates, Rick and Sean discuss the case of Madore-Ogilvie vs. Ogilvie Estate which was recently featured in the CCH periodical Will Power.

Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.

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05 Feb

Asset Particulars – Hull on Estate and Succession Planning #98

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

Listen to Asset Particulars

This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the importance of keeping track of asset details.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estate and Succession Planning blog.

 

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15 Jan

Funeral Considerations – Hull on Estate and Succession Planning Podcast #95

Hull & Hull LLP Executors and Trustees, Funerals, Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Podcasts, PODCASTS / TRANSCRIBED Tags: , , , , , , , , , , , , , , , , , , , , , , , , , 0 Comments

Listen to Funeral Considerations

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss the considerations and responsibilities of estate trustees at the time of a funeral.

They also introduce Malcolm Gladwell‘s book ‘The Tipping Point’ as a different way of understanding family behaviour at the time of death.

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