When friends and family gather subjects involving law often come up, whether it be wills or the divorce of a cousin. That usually leads to “here’s what the lawyer told me to do.”
The problem is that the legal advice tailored for your aunt Alice might not fit your needs.
For example, insurance is one of the tools that lawyers might recommend to assist planning her estate. Most provinces require that your will leave a large portion of your estate to your current spouse. If Alice left everything to her children, her second husband could challenge the will under a host of different legislation.
By leaving most of her estate to her husband and providing for her children as beneficiaries under her life insurance, she is best able to provide an inheritance to her children.
Insurance is also useful when trying to equalize an estate between siblings. Imagine if Alice was a widow who farmed with her son, Brett.
She has another son, David, who moved out of province and has an office job.
She wants to leave the farm to Brett, but she’s worried that the rest of the estate, which she would leave to David, won’t be nearly as valuable as the land and machinery. She doesn’t mind Brett getting a little more of the estate than David because he helped her run the farm, but she doesn’t want to be unfair.
Alice could purchase insurance to try to make up for what she thinks the shortfall will be in David’s share. It won’t be perfect but the farm stays in the family under Brett’s care, and David will get his share topped up.
There are plenty of reasons to get insurance, but whether it makes sense as part of an estate plan is case by case. A lawyer can help with that.