Estate Planning

Rozon v. TransAmerica Life Insurance: Another Benefit to Owning Life Insurance

By Hull & Hull LLP

Administering an estate poses many challenges for an estate trustee. An interesting question was considered in Rozon v. TransAmerica Life Insurance, which dealt with the issue of whether an insurance company may require that a Certificate of Appointment of Estate Trustee or probate be obtained prior to the funds being advanced to the estate by an insurance company.

In this decision, more than $2,000,000.00 in life insurance proceeds was payable to the estate. Had probating the Will been required, the fees which would have resulted would have been close to $80,000.00. In deciding this case, Mr. Justice Charbonneau of the Ontario Court (General Division) ruled that probating a Will was not required for the purposes of advancing the insurance proceeds to the estate. Rather, he was of the view that the evidence obtained from an unprobated Will was sufficient. Costs were also awarded in favour of the estate trustees. Mr. Justice Charbonneau's ruling was affirmed by the Ontario Court of Appeal.

Despite this significant ruling, insurance companies continue to be hesitant with respect to paying out the proceeds of a life insurance policy without receiving the probated Will. It is for this reason that it is likely that further cases will make their way to the courts. It will be fascinating to see how the courts address these issues.

Thanks and have a great day,

Allan Socken

Full post as published by Toronto Estate Law Blog on April 01, 2008 (boomark / email).