As an estate litigation firm, Derfel Estates Law routinely represents clients involved in disputes about what should happen to the estate of someone who has passed away. Oftentimes, these disputes include multiple parties who each claim that they are entitled to the entire estate or part of the estate. If the assets of the estate have not been distributed prior to the litigation, they have to rest somewhere. In some cases, such as one recently heard by the Ontario Superior Court of Justice, a third party may hold assets, and in the case of litigation, do not want to maintain responsibility for them.
Insurance policy payout under dispute
The applicant in the matter was a life insurance company who was seeking permission to pay into the court the proceeds of an insurance policy issued to the deceased. The amount payable under the insurance policy was $122,369.04.
The deceased had established an investment account with the applicant, and with it came a death benefit guarantee/insurance policy. He appointed his partner (“JS”) as the beneficiary of the policy and added his son (“RB”) as the contingent beneficiary.
However, the deceased also had a will which he had signed on August 2, 2012. The will appointed his former spouse as the estate trustee, and in the event she predeceased him, his daughter-in-law (“SLB”) was to be estate trustee. Ultimately, the deceased’s former spouse passed away before him, and SLB was named trustee of the estate.
SLB wrote to the applicant on October 20, 2020 stating that the policy was being contested. This was followed by a letter from her lawyer requesting that nothing from the policy be paid out pending the determination of the issues concerning entitlement.
What options does the Insurance Act make available?
The court noted that Section 214 of the Insurance Act states,
(1) Where an insurer admits liability for insurance money and it appears to the insurer that,
- there are adverse claimants;
- the whereabouts of a person entitled is unknown.
- there is no person capable of giving and authorizing to give a valid discharge therefor, who is willing to do so;
- there is no person entitled to the insurance money; or,
- the person to whom the insurance money is payable would be disentitled on public policy or other grounds,
the insurer may, at any time after thirty days for the date of the happening of the event upon which the insurance money becomes payable, apply to the court without notice for an order for payment of the money into court, and the court may upon such notice, if any, as it thinks necessary make an order accordingly.
(3) A payment made by an insurer under an order made under subsection (1) discharges the insurer to the extent of the amount of the payment.
In this case, the applicant has admitted it is liable to pay out the insurance money to someone yet to be determined. In addition, more than 30 days have passed since the holder of the insurance policy passed away, and as such the court ruled that the applicant had met the requirements under the Act and ordered that the money from the policy be paid into the court.
Contact Derfel Estate Law to speak with an estates lawyer who will guide you through the process of passing of accounts, ensure that your rights and interests are protected, and work with you to achieve the best possible resolution. Call us at 416-847-3580 or contact us online to schedule a consultation.