Insurance and estate law update

By Staff | June 16, 2014 | Last updated on June 16, 2014
3 min read is live-tweeting the 16th annual STEP Conference today via @advisorca.

Here are some key takeaways from morning sessions on insurance and trust and estate law:


#STEP2014 policyholder tax legislation expected to released by mid year. From there it will take 2 years to implement.

#STEP2014 main impacts will be that for the first 8 years, you can put in more cash but then fall off.

#STEP2014 over the life of a policy 10 to 12 percent less will be able to accumulate. UL policies will be most impacted.

Read: What’s in store for permanent insurance?

#STEP2014 investors can fund them up today, but it will be drawn out over 7 or 8 years. And investment income tax will increase on UL.

#STEP2014 new rules will also address joint and multi life policies to make them more comparable with other products.

#STEP2014 when a policy is held until the death of the individual, there’s no tax. But if it’s cashed out tax applies to the gain.

#STEP2014 New rules reduce some gains for individuals but they have the opposite results for businesses if an owner dies.

#STEP2014 there will be potential for a death benefit on a multi-life policy to trigger some gains, which will force some planning changes.

#STEP2014 new mortality tables will lead to higher taxable amounts for annuity payouts.

#STEP2014 grandfathering for pre 1982 in force policies will capture tax advantage.

#STEP2014 adding coverage will result in a loss of grandfathering. So make changes without going back to underwriting.

#STEP2014 it’s likely that term conversions won’t be grandfathered so if clients need this done. Do it before the rules go into force.

#STEP2014 CRA has taken a stance against corporate owned insurance because of planning work being done.

#STEP2014 it’s unclear whether CRA will grandfather these arrangements.


#STEP2014 CRA is looking at spousal trusts, alter ego joint partner trusts and says they can be tainted for rollover of property.

#STEP2014 there are exceptions in cases were the trust is the beneficiary and not the owner of the policy.

Read: 6 tips for estate planning success

#STEP2014 this is bad for things like residences that are maintained by the trust for a beneficiary.

#STEP2014 BC has joined Alberta in deciding that marriage will revoke a prior will.

#STEP2014 Nova Scotia has passed perpetuity laws that allow trusts to last forever. And, can you change an existing trust into this new law?

#STEP2014 some recent law changes could pave the way for digital wills, but that’s a whole separate discussion.

#STEP2014 some estate trustees have been chilled by the notion that defending a will would cost them money. Recent law changes ease worries.

#STEP2014 there are still rules preventing inheritance when there is illegal or questionable activity.

#STEP2014 a pour over clause puts the residue of the estate into an inter vivos trust. But that trust can be adjusted right up to death.

#STEP2014 most judges will look for ways not to declare intestacy. They want trustees to have tools to act on their mandates.

#STEP2014 attorney’s may settle inter vivos trusts provided its determined to meet the intentions.

Read: Name trustees for disabled clients staff


The staff of have been covering news for financial advisors since 1998.