TEP Strategy: April 2013 - Family wealth transfer plan

Family Wealth Transfer Plan: permanent life insurance, an efficient way to accumulate and transfer wealth

April 2013

Are you aware that permanent life insurance can be used as an efficient way of accumulating and transferring wealth? The Family Wealth Transfer Plan utilizes an effective insurance strategy that allows a parent or grand parent to transfer assets tax free to the next generation by purchasing an exempt insurance contract on the life of a child or grandchild.

What are the advantages?

  • You can transfer wealth tax-free from one generation to the next and reduce your taxable income.
  • By designating a child or grandchild as the insured, you as the owner reduce your insurance charges, allowing a greater build up of assets.
  • By designating a child as the successive owner of the life insurance policy, you ensure that funds are passed outside of the will, thereby avoiding probate fees* and minimizing the risk of contestability. Please note that the child must be legally entitled to own an insurance contract when the transfer is made.
  • Assets accumulate within the permanent insurance policy on a tax deferred basis.
  • You as the owner may maintain control of the policy until the transfer.
  • Will help create a large estate value that can be passed down to children and grandchildren.
  • You may transfer ownership of the policy to the child or grandchild during his/her lifetime. Once the ownership change has been made, the new owner can control the policy, appoint his or her own beneficiaries, and even access the cash value if needed.


Who can benefit from this strategy?

  • Individuals looking for alternative methods to use investments that are intended to be passed on to the next generation tax efficiently.
  • Individuals who may be uninsurable or difficult to insure but wish to take advantage of the ability to transfer funds inside a tax exempt permanent insurance policy.

In summary, if the objective is to consider ways to transfer wealth to the next generation and grow their estate value in a tax efficient manner, a Family Wealth Transfer Strategy should be considered.


To learn more about this strategy and explore whether it is appropriate for you or to receive a complimentary copy of our publication on this subject, contact your Investment Advisor.


*Probate fees are not applicable in Quebec.