{"id":948190,"date":"2026-10-27T13:34:21","date_gmt":"2026-10-27T13:34:21","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/948190\/"},"modified":"2026-10-27T13:34:21","modified_gmt":"2026-10-27T13:34:21","slug":"how-insurance-can-smooth-out-estate-plans-and-smooth-over-family-conflicts","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/948190\/","title":{"rendered":"How insurance can smooth out estate plans \u2013 and smooth over family conflicts"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A cottage can be a gift across generations, if the transfer is planned well.GETTY IMAGES<\/p>\n

Family cottages typically hold powerful memories, but without proper estate planning those thoughts can turn into painful reminders. <\/p>\n

Keri O\u2019Driscoll, an insurance consultant for the Escarpment Advisory Group in Burlington, Ont., part of Scotia Wealth Management, describes a situation where two adult children have differing priorities. One wants to spend summer weekends at the cottage and is adamant about keeping it. The other rarely visits and, after the parents pass, would rather receive cash from a sale.<\/p>\n

That\u2019s where life insurance is able to intervene to head off a potential battle. A policy can quickly cover the cottage\u2019s tax bill and compensate heirs who have little interest in owning it. Permanent policies can establish who receives money and provide a contractual payment when property changes hands following a death. <\/p>\n

\u201cPeople spend so much time accumulating their wealth that they don\u2019t always spend time overseeing that the wealth is then distributed,\u201d Ms. O\u2019Driscoll says.<\/p>\n

She adds she often encounters families who assume they can transfer a property to their children for as little as $1. But under Canada Revenue Agency rules, capital gains tax can still be calculated on fair market value. Assets are also generally deemed sold at death, even if heirs retain them (although transfers to a spouse or qualifying spousal trust may defer the tax).<\/p>\n

For families with substantial property or assets, these liabilities can create an urgent need for cash. Life insurance proceeds help cover the tax bill without forcing heirs to sell. The key is ensuring the proceeds are available to pay those taxes. <\/p>\n

Insurance can also help families accommodate competing visions for assets. Parents might leave a property to the child who wants to maintain it while directing the insurance proceeds to siblings.<\/p>\n

\u201cThat still can be considered fair. Equal doesn\u2019t necessarily have to mean equal division of assets,\u201d says Carrie Milne, head of sales for guaranteed wealth solutions at Manulife.<\/p>\n

Money paid directly to named beneficiaries generally bypasses the estate and cannot automatically be used by the executor. Ms. O\u2019Driscoll emphasizes the importance of co-ordinating policy ownership, beneficiary designations and the will, so the right people receive the cash needed to meet the estate\u2019s obligations.<\/p>\n

A policy\u2019s contractual provisions enable owners to name multiple beneficiaries and assign different shares of the proceeds. Revocable designations can be changed as family circumstances evolve, while irrevocable ones generally require the beneficiary\u2019s written consent before changes can be made, according to the Financial Consumer Agency of Canada (FCAC).<\/p>\n

Together with wills, trusts and shareholder agreements, insurance arrangements can give surviving family members clear instructions and greater financial flexibility to smooth out what can be an emotional or rocky process, FCAC says. <\/p>\n

Another application for insurance in wealth planning involves business succession. Ms. O\u2019Driscoll points to buy-sell agreements, which specify that surviving owners or the company can purchase a deceased shareholder\u2019s stake. Life insurance can finance the transaction, allowing heirs to receive value while the remaining owners retain control without draining operating capital.<\/p>\n

For the arrangement to work as intended, the policy\u2019s ownership, beneficiaries and coverage must align with the legal terms of the buy-sell agreement and the company\u2019s valuation, she says.<\/p>\n

The stakes extend well beyond the wealthiest of entrepreneurs. A survey by the Canadian Federation of Independent Business found that 76 per cent of small-business owners intend to exit within a decade, though just 9 per cent have a formal succession plan.<\/p>\n

Manulife\u2019s tax and estate planning group also recommends funding buy-sell obligations in advance rather than depending on asset sales or bank loans. Insurance can\u2019t guarantee business continuity, but it can help prevent an agreed buyout from becoming a financial crisis.<\/p>\n

Covering all or a portion of the buyout with a policy gives the agreed ownership transition a much better chance of proceeding without problems arising, Ms. O\u2019Driscoll says.<\/p>\n

She advises a review of estate plans every few years, or following births, marriages, divorces or significant changes in wealth, to ensure insurance policies and other planning aspects still reflect the family\u2019s intentions.<\/p>\n

Whether for business succession or other transfers of assets, it\u2019s essential for family members to clearly understand the arrangements, says Tom Deans, author of The Happy Inheritor. <\/p>\n

\u201cAdvisors are being called upon more than ever to begin important family conversations,\u201d he says, suggesting that meetings bring together family members, accountants and lawyers before any assets change hands.<\/p>\n

What matters is discussing wishes and plans openly \u201cso that there are no surprises.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A cottage can be a gift across generations, if the transfer is planned…\n","protected":false},"author":2,"featured_media":948191,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[1401,1397,49,48,324592,324593,13619,5770,297175,324594,61],"class_list":["post-948190","post","type-post","status-publish","format-standard","has-post-thumbnail","category-technology","tag-adveditorial","tag-appwebview","tag-ca","tag-canada","tag-estateplanning","tag-familywealth","tag-inheritance","tag-insurance","tag-ordid3878384111","tag-successionplanning","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/948190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=948190"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/948190\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/948191"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=948190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=948190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=948190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}