Divorce / Estate Planning and Insurance

Estate Planning and Insurance

When your marriage breaks up you may want to change who receives your assets in the event of your untimely death. There are various issues to consider:

  1. Your Will

    Usually couples make each other the beneficiary of their Wills. When you get divorced any provisions in the Will where the former spouse is left assets or made the Executor are revoked. Therefore, you will need to reassess the provisions in your Will. Consequently, if you are drafting a new Will after a marriage breakdown you should make sure that any dependent children are properly provided for on your death. The Family Law court can step in and overrule your Will if you don’t. Take the opportunity to review this Will planning checklist on important issues to consider when creating a Will, and complete this personal record keeper to help you gather and update important information that you can share with loved ones including your executor or executrix.

  2. RRSPs and RRIFs and Life Annuities

    With these investment structures you can (and should in most circumstances) have named beneficiaries. When your relationship breaks down you will need to look at these to determine if the beneficiaries are still appropriate in your new situation.

Insurance

In many cases, married couples name each other as the beneficiaries of their life insurance policies. If you are becoming separated or divorced you may want to reconsider who you name as your beneficiary. If you do not contact the insurance company your former spouse will continue to be the beneficiary of the policy. In the case of relationship breakdown you may want to change the insurance coverage on your life in order to provide for your children should anything happen to you.

Depending on the nature of the separation agreement, you may be required to buy life insurance with your former spouse and/or children named as the beneficiaries. This is typically the case where spousal and/or child support is being paid by the primary income earner. This ensures that if the supporting spouse dies there would be enough money to support the children. In the case of this type of policy, the beneficiaries are ‘Irrevocable’. That means the beneficiary cannot be changed to someone else without the written permission of the current beneficiary.

Speak to your financial advisor about how your relationship breakdown impacts your insurance coverage.

Important Information

Information contained herein is provided for information purposes only and should not be relied upon exclusively as estate, tax planning or investment advice, nor should it be construed as being specific to an individual’s investment objectives, financial situation or particular needs. You should always obtain professional advice before acting on the basis of material contained herein. While Dynamic Funds® will endeavour to update this information from time to time as needed, information can change without notice and Dynamic Funds® does not guarantee the accuracy or completeness of this information, including information provided by third parties, at any particular time, nor does it accept any responsibility for any loss or damage that results from any information contained herein.

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