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  • Obtaining life insurance for support obligations

    I just read a case on Canlii that I found really interesting (me being a family law layman and all), in particular paragraphs 13-15:

    CanLII - 2012 ONSC 5339 (CanLII)

    It makes me wonder then, if two individuals agreed that the support payor would obtain an insurance policy of X amount and designate the recipient as an irrevocable beneficiary, and have that agreement issued as a court order, would the payor then be able to claim that the court does not have the jurisdiction to issue such an order, just like the above case? Or would it be a different matter if the court made such an order based on the consent of both parties?

  • #2
    Wow, that is a good question.

    To explain the issue, the court may order that an EXISTING life insurance policy designate the beneficiary to be the recipient of support.

    In the case cited, the judge states that the court does not have the authority to require a party to take out a new insurance policy; if no policy exists, then the court cannot make an order in this regard.

    It opens the question, if we file our separation agreements with the courts, and elements of our agreements are not within the courts' jurisdiction, are those elements unenforcable?

    I would love to have Oldlawyer and Orleanslawyer give their opinions on this.

    My feeling, completely an amateur opinion, is that elements of a separation agreement are only enforcable if supported in law. Certain things may not be contracted, whether we agree to them or not. I may sign a contract to be Natalie Portman's sex slave, but it is not enforcable by the courts.

    Obviously that is an extreme example, but it is a clear illustration (perhaps of more things than I should admit...) If we register our agreements with the courts, the only parts that we can count on being enforced are those supported by law.

    However that alone does not describe the boundaries here. There are agreements, such between Natalie Portman and myself, that cannot be enforced because of constitutional limitations and possible human rights violations. I don't believe requiring life insurance is either. So it's possible that such a clause may be enforced because there is no superior law that forbids it; meanwhile a judge may not make such an order because there is no legislation that allows it.

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    • #3
      Originally posted by Exquizique View Post
      ...
      ... the support payor would obtain an insurance policy of X amount and designate the recipient as an irrevocable beneficiary...
      As a side note, both parties should have life insurance policies in place, regardless of who the current support payer is.

      Comment


      • #4
        Originally posted by billm View Post
        As a side note, both parties should have life insurance policies in place, regardless of who the current support payer is.
        Even if the parties have enough assets to self insure against this? Unmarried parents children have a first charge on the estate.

        Comment


        • #5
          Originally posted by FaithandMorals View Post
          Even if the parties have enough assets to self insure against this? Unmarried parents children have a first charge on the estate.
          No, life insurance is only required if assets are not sufficient. However, it seems easier to just order or agree to life insurance.

          My proposed SA has a formula for how much life insurance is required (basically enough to cover full CS until youngest is 22, declining every year), payable to my spouse. It does not mention assets, but could.

          I have a 10 year policy in place (at which time my youngest will be 22) for more than what is needed to cover CS. I set the beneficiary to my ex for the portion that is needed for CS, the rest for my kids directly.

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          • #6
            Mess, very good points! OrleansLawyer, perhaps you would care to share some input on this?

            Comment


            • #7
              Originally posted by Mess View Post
              It opens the question, if we file our separation agreements with the courts, and elements of our agreements are not within the courts' jurisdiction, are those elements unenforcable?
              Your assumption is correct. Just because two parties agree to something doesn't necessarily make it enforceable.

              Case in point: Getting a court order for children to attend registered sports and/or school in a district for which neither parents reside in.

              These organizations have laws, rules, regulations and by-laws. If they are being instructed by the court to do something that is in contravention to their governance structures they need to be parties to the case. If they are not given the opportunity to represent their position set forth by their rules, regulations and by-laws as a third party then those things become useless.

              If a judge permits such conduct then they set a president that allows all parents to "forum shop". The consequences to planning, budgets and class allocations across the boards becomes complete and utter anarchy. Same goes for third party sports organizations such as Hockey Canada.

              When filing anything with the court it is reviewed by a judge. If your agreement is un-enforcable they should be notifying both parties of the fact. I see judges tell parties all the time when sitting in motions that what they have agreed to, even with ILA is "un-enforcable" and should either party bring forward a contempt motion the court would not be able to do anything.

              Another case on point: Daycare

              The parents agree to daycare. They agree to a daycare provider. The daycare provider no longer wants to care for the child for any reason. Just because the parents agreed to and got a court order that the child "shall attend daycare X" does that mean the daycare has to take the child? They are an independent business / person. Where are their rights in the decision made independent of their rights under law? You can't compel the daycare with the court order to accept the child. You couldn't bring the other parent to court on contempt if the daycare closes.

              If a complex issue dealing with a third party they need to be a part of the party to the action before the court. If they are not and don't agree to the conditions for which there is no governing Act and the order does not consider that... The order isn't worth the paper it is written on.

              The only people who profit from such nonsense are negative advocate solicitors who dish out bad advice to clients.

              Good Luck!
              Tayken

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              • #8
                if two individuals agreed that the support payor would obtain an insurance policy of X amount and designate the recipient as an irrevocable beneficiary, and have that agreement issued as a court order
                A contract stating that a party must obtain an insurance policy, and that said policy must have a value of X and a beneficiary of Y.

                In the case cited, the judge states that the court does not have the authority to require a party to take out a new insurance policy; if no policy exists, then the court cannot make an order in this regard.
                This is the ratio of the judgment; that the legislation does not provide that the court may Order someone to obtain a new policy.

                It opens the question, if we file our separation agreements with the courts, and elements of our agreements are not within the courts' jurisdiction, are those elements unenforcable?
                An argument that they are enforceable pursuant to the law of contracts would likely be favourable. The court is not enforcing the legislation but rather a contract between the parties. That the legislation has contemplated favourably the assignment of the benefits of an insurance policy to vitiate the risk of loss of support through accident or death would, I submit, be favourable to the party seeking enforcement.

                elements of a separation agreement are only enforcable if supported in law. Certain things may not be contracted, whether we agree to them or not. I may sign a contract to be Natalie Portman's sex slave, but it is not enforcable by the courts.
                All elements of a contract are prima facie valid; the onus is on the party to show that they should be found invalid. If not seeking to invalidate the contract as a whole (improper execution, unconscionable, etc.) then the argument that the clause should be excised on grounds of public policy is often made.

                An example of this would be chastity clauses in separation agreements. If you make spousal support contingent upon your ex not having physical relations, the contingency will be struck from the contract.

                I don't believe requiring life insurance is either. So it's possible that such a clause may be enforced because there is no superior law that forbids it; meanwhile a judge may not make such an order because there is no legislation that allows it.
                Your reasoning is sound.

                My proposed SA has a formula for how much life insurance is required (basically enough to cover full CS until youngest is 22, declining every year), payable to my spouse. It does not mention assets, but could.
                There are Guideline insurance amounts, if you are interested in looking into that.

                Just because two parties agree to something doesn't necessarily make it enforceable.
                It is not enforceable against a third party, but rather against each other. If there is an Order that a child attend a certain school, it isn't enforceable against the school. The enforcement would be against the parent that sought to hinder enrollment, failed to pay tuition, etc.

                Comment


                • #9
                  OrleansLaywer, thank you for your input … this is all really interesting.

                  Let’s use a hypothetical situation. Say that a Payor and Recipient agree on consent that the Payor will obtain a new policy in the amount of X and designate the Recipient as the beneficiary for X number of years. They include this clause in their separation agreement and it is included in the divorce order (as an order) based on consent.

                  However, for whatever reason, the Payor then decides not to comply and refuses to obtain said new policy.

                  If the Recipient brings the Payor to court for contempt on this matter, and asks that the court enforce this clause as relief, how would the court do so? How does the court “order enforcement” without ordering that the Payor obtain a new policy? Does the court simply make an order that the Payor comply with the previous order (to obtain the new policy)? Or does the court order penalties (financial or otherwise) against the non-compliant Payor until the Payor complies/purges contempt?

                  Comment


                  • #10
                    If the Recipient brings the Payor to court for contempt on this matter, and asks that the court enforce this clause as relief, how would the court do so?
                    If they are found in contempt then the court has all of the usual remedies for contempt available to them. They range from costs for the day to jail time.

                    Comment


                    • #11
                      Originally posted by OrleansLawyer View Post
                      If they are found in contempt then the court has all of the usual remedies for contempt available to them. They range from costs for the day to jail time.
                      But would it be considered contempt, even though the clause is unenforceable?

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                      • #12
                        But would it be considered contempt, even though the clause is unenforceable?
                        What makes the clause unenforceable? They contracted into an obligation; they are now in breach of that contract. Pursuant to the FLA, that contract may be enforced as a court order.

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                        • #13
                          Okay...so parties may include whatever clause they wish in an agreement, even if by law there is nothing enforceable about it, but if one party fails to follow through, they can be brought to court for contempt?

                          I know it has been discussed on here before about something in an agreement stating that the children would not be in contact with a certain family member (one of the party's mother in the case I am thinking of), well after all is said and done, party B decides that the children should be able to spend time with their grandma, but the agreement states the children will not be left in her care, can party A then bring this to court and get party B on contempt of the agreement because he is allowed the children access to their grandmother?

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                          • #14
                            on the matter of insurance, i understand the court can order for insurance to be purchased, but can one argue to have a different trustee than the CP?

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                            • #15
                              Originally posted by OrleansLawyer View Post
                              What makes the clause unenforceable? They contracted into an obligation; they are now in breach of that contract. Pursuant to the FLA, that contract may be enforced as a court order.
                              The original clause would have to be provided to really understand why it is "unenforceable".

                              If the clause is flawed, in contravention of Acts, Laws and violates the rights of an uninvolved third party... The clause is about as good as the paper it is written on. Also, if the clause cannot be understood by a judge it is unenforceable.

                              Comment

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