Ensure You Insure

Topic: Family Law October 26, 2018 by Carol Cochrane

Two cases that recently came before the Family Court in Ottawa highlight the need for lawyers to do their homework when advocating for their clients who have an entitlement to support (be it child support or spousal support) from their estranged partner.

Most practitioners know that when they advance a claim for support they should also seek a Court Order requiring the support payor to secure or to maintain a life insurance policy as security for the payment obligation. Consideration needs to be given – and evidence needs to be led– as to whether insurance can be obtained, how much is an appropriate amount to maintain, and what the cost of that insurance might be.

In the case of SS 1 v. SS 2, Justice Shelston was facing the situation of a support payor/ father who did not own a life insurance policy. Unfortunately, the Court received no evidence at trial as to the father’s insurability and of the cost of insurance coverage. Further, Justice Shelston had no evidence to address the calculation as to the amount of life insurance that would be appropriate to secure the payment obligation. As a result, Justice Shelston felt his hands were tied and merely ordered the father’s obligation to pay child support as an obligation that would bind his estate.

In Ouellette v. Uddin, a July, 2018 decision, the support payor/father had a policy of life insurance with a face amount of $100,000.00 but the support recipient/mother was seeking $500,000.00 in life insurance as security. In the absence of evidence to support the request for $500,000.00 of insurance, Justice Shelston ordered the $100,000 to serve as security and again ordered that the obligation to pay child and/or spousal support be a first charge on the payor’s estate in addition to the policy of life insurance held.

An obligation that binds a party’s estate may not be very helpful if the estate has no assets in it.

The lesson learned is that counsel must do a thorough and complete job in providing to the Court all of the evidence it needs to address a claim for security. Is the payor insurable? Is there insurance available? How much are the premiums associated with the policy? How much is genuinely needed to provide security for the payment obligation?

The breakdown of a family unit can often give rise to a dependent’s financial insecurities, but the death of the support payor needn’t compound those insecurities if the right questions are asked and the right evidence is put forward.

If you would like to learn more about this issue, feel free to contact a member of the LMR Family Law Group.