Estates & Wills & Trusts

Review the life insurance policies in your estate: Allinotte

By Tony Poland, Associate Editor

Reviewing life insurance policies can be vital in estate planning, Cornwall wills and estates lawyer Michele Allinotte tells

Allinotte, principal of Allinotte Law Office Professional Corporation, says people can forget about policies they purchased decades before, which can lead to problems when the policyholder passes away.

"Certainly the older the policy is, the easier these mistakes can happen, and sometimes the family doesn't know that one even exists,” she says. “It can be a huge issue for the families.”

Allinotte says coverage could have been purchased early in life, so finding the paperwork can be a task.

She also notes that policies may have been converted to a share ownership, which necessitates locating the certificates when the owner passes away, which “can become frustrating.”

“Do you still have the share certificates? If you don’t, you need to file an affidavit and an indemnity form explaining why it was lost,” Allinotte says.

It may be necessary to have all the beneficiaries sign the indemnity form. She says she handled one estate where 13 people were named, so tracking down the signatures was difficult.

Proving that coverage exists can be cost-prohibitive, Allinotte explains.

“Often the value of the asset is worth a few hundred dollars more than the cost of realizing the asset, and it just ends up being a source of stress," she says. “Because of the small amount if you haven’t dealt with it correctly, or if you don’t have the proper paperwork, it causes a lot of headaches for very few dollars.”

Allinotte says having access to the policy is important.

“I recently had a client who is 88 years old. He has a small life insurance policy worth $5,000 that his parents purchased when he was a minor," she says. "But the paperwork that he had in my office was quite old. So I encouraged him to contact the company and make sure that it was still there, that he had done the proper beneficiary designation and the policy was paid up."

Allinotte encourages clients to ensure that a person acting as an attorney for their property is aware if premiums still need to be paid in case the policyholder becomes unable to handle their own affairs.

"If someone becomes incapable and they miss payments on a life insurance policy that they’ve been paying for a number of years, that policy might be cancelled," she says.

It's also essential that the policyholder explains what they want the assets to be used for when they have passed away, Allinotte says.

“Often people will say, ‘I’ve named my friend who is my estate trustee as the beneficiary of my life insurance because they’re going to use it to pay for the funeral.’ Do they know that? Have you told them because they have no legal obligation to do that," she says.

"They could use it for their own purposes. If you make somebody the beneficiary in your life insurance, it’s like a gift to them unless you’re making clear that that’s interest for your estate.”

She says when it comes to life insurance it’s “important to review the decisions that you’ve made every few years.”

“I always have clients do that homework because they may have made decisions that made sense at the time but no longer do," Allinotte says. "The older the policy is, the easier these mistakes can happen."

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