Is government entitled to your life insurance payout??

[Jason from Ottawa]

I have question here and am hoping I can get some input.

A divorced parent was required to pay the child support. The payment was supposed to start 15 years ago, but the supposed payee has yet made any payment. Now he is about a few hundred of thousand behind, while the other parents who have the children was not provided any financial support.

The supposed payee does not work and does not possess any asset. The only thing he has that can go toward is his life insurance payout. If his beneficiary is someone else, does the government have the right to recover the payment from his life insurance policy after his pass-away?

Any input is appreciated.

[FL_Needs_To_Change]

From one of the intro pages of this site,

If you are required to pay child support or spousal support, then you will normally be required to have life insurance as security for this obligation.

"Why do I need to obtain life insurance?"

If you were to pass away without having life insurance in place, your ex may not have sufficient funds to look after himself or herself, or the children.

Note that your liability for child support or spousal support continues after you pass away. According to section 34(4) of the Ontario Family Law Act, "An order for support binds the estate of the person having the support obligation unless the court provides otherwise."

To read the rest of the this article,
Life Insurance

[Jason from Ottawa]

I see your point. But this insurance was set up a long time before the divorce takes place, and the beneficiary may or may not be the children or the spouse. What happen to that payout? Is the life insurance policy considered part of his asset? Or the asset of his beneficiary which cannot go to the child support?

[FL_Needs_To_Change]

I believe that it can be deemed an asset to which the courts could order support against via liquidation while the holder is still alive..
It is not an asset of the beneficiary until or unless the holder dies.
At which time the custodial parent has the right to contest the right of the beneficiary to the money and ask that the payment be held in trust until the courts make a ruling on whether or not it is to be used to satisfy his support obligation to his surviving children.

Having a will drawn up may circumvent this action against his insurance, however he must make provision for any surviving children, or the will too can be contested based on his support obligation.

It is extremely difficult if not impossible to side step a support order/obligation.