Issue link: http://clhia.uberflip.com/i/405151
11 Irrevocable Beneficiary HOW TO MAKE YOUR LIFE INSURANCE WORK FOR YOU The beneficiary designation affects whether or not insurance proceeds are protected from your creditors. Provincial insurance laws provide that where a spouse, child, grandchild or parent is named as the beneficiary, the insurance money is exempt from seizure by any creditors you may have.In Quebec, the beneficiary must be related to the policyholder. In other provinces, such a beneficiary must be related to the person whose life is insured. This special protection includes adopted children in most provinces, but it does not apply to an ex-spouse unless he or she has been named an irrevocable beneficiary. Creditor Protection Note that a designation in a will does not override an earlier beneficiary designation under an insurance policy, unless the will specifically identifies the insurance policy in question. (However, even a specific will would not override an irrevocable beneficiary designation.) In one court case, a man, in his will, had named his present wife as sole beneficiary to his estate. But he hadn't changed the appointment of his former wife as beneficiary in his life insurance policy or identified the policy in his will. The court ruled that the former wife should get the money. Wills You may name an irrevocable beneficiary or an irrevocable trust. This means that you, as the policyholder, can't change or revoke that beneficiary without the latter's consent. The money is protected from your creditors and doesn't become part of your estate. (In Quebec, a spouse is considered an irrevocable beneficiary, and divorce automatically cancels that preferred status.) TIP: If you name a beneficiary, the money does not go through your estate but goes directly to the person or organization you name. No probate fees apply. FACT: Contingent beneficiary This is someone who receives the proceeds from your policy if your primary beneficiary, such as your spouse, is no longer living.