One of the chaotic tasks that must be performed in the event of a divorce is the sorting of life insurance, which is often overlooked. In the midst of the struggles for childcare, the distribution of assets, the search for a new home, ensuring that children adapt as well as possible and generally getting used to individual life to discover what to do with life insurance, it is sometimes left out. Life insurance is often an important step in the separation process, despite the difficult conversations they can invite. As a general rule, life insurance serves as an additional provision for support commitments; this is particularly valuable in cases where children are involved to ensure that, in the event of a parent`s death, funds are allocated to their care. As a result, many separation agreements contain life insurance clauses and Section 34 (1) (i) of the Family Act allows courts to order the appointment of a former spouse as an irrevocable beneficiary of life insurance. It is especially important to have witnesses if you want to do something that some consider to be a controversial change (including changing life insurance beneficiaries). The policyholder can do whatever he wants, but collecting witnesses could save trouble later if he talks to the people involved about the parts he makes. It would be more difficult for people to challenge changes with beneficiaries if the policyholder indicated that he knew what he was doing when he did them. Dispute of the designated beneficiary of life insurance If the father unreasonably refrains from updating his policy despite a thorough request, counsel may obtain a court order to order an amendment to the designated beneficiary in order to comply with the separation agreement. If marriages break down, couples would generally enter into a separation agreement on matters such as custody of the children.
Family allowances can be granted as beneficiaries of an ex-spouse`s life insurance. In the event that the ex-spouse (“father” as an illustration) never updated his policy to meet the needs of his child from his previous marriage and the father died unexpectedly, questions about the father`s right to the proceeds of life insurance would arise. On the one hand, we have the child or the child`s mother who claim that the product must be returned to the child under their separation agreement and, on the other hand, we can have the father`s new family who says that the income is part of the estate or, more complex, that the proceeds are returned to the beneficiary currently cited. Maybe that person is a new spouse. The problems are many, but the first visit to the client is how to apply the child care provision in the separation agreement. Dagg v. Cameron Estate demonstrates the limitations of irrevocable designation of beneficiaries under the SLRA and the value of obtaining appropriate legal advice to properly isolate an insurance policy from the scope of the SLRA. After reviewing the case law in this area, the Tribunal found that the test to be completed was whether the sole purpose of the insurance clause was to serve as a “guarantee” for support obligations. It found that, to the extent that the clause was not to lead to such a singularity of the object, the Tribunal had to find that the clause should be considered a stand-alone clause. The court stated that an Ontario court had recently had to decide whether a clause in a separation agreement requiring the husband to provide life insurance for his former wife was a stand-alone clause that, after his death, was entirely mobile, or whether it was only to be used as a “guarantee” to support the spouses.
In the end, the Tribunal found that the following points indicated that the insurance policy was intended as a “self-contained” clause: some life insurance, particularly whole-life and universal policies, accumulate a current value over time. Every month, when you pay your premium, some of that money goes to a fund that increases with interest.