*This post is from CMB partner Finuity Wealth. Find out more about group benefit solutions here.
For many Canadians, the assets they hope to pass down—like a second property, family business, or recreational land—carry far more than financial value. They represent legacy, identity, and shared memories. But when it comes time to pass these assets on, things can quickly become complex.
Not every heir may want to own or manage the asset. Some may want to keep it, others to sell. Some may be financially able to buy others out—many are not. These differences can turn a well-intended inheritance into a source of tension, conflict, or even legal dispute.
That’s where life insurance can play a vital role in preserving your legacy—and your family relationships.
The Challenge of Dividing Indivisible Assets
Many legacy assets don’t divide cleanly:
- A family property can’t be split three ways without major challenges.
- A family business can’t be equally run by multiple siblings with different interests.
- Valuable land might not be wanted or usable by all heirs.
Often, one heir wants to take on the asset—and others want (or need) fair compensation. But if there’s no liquidity in the estate to support this, families are forced to make hard choices.
The Role of Life Insurance in Fair Succession
A properly structured life insurance policy can create the liquidity needed to preserve these assets and avoid unfair or impractical divisions.
Here’s how:
- Equalization: Insurance proceeds can help equalize the estate when one heir inherits the asset and others receive cash.
- Buyouts: One child can use the payout to buy the others’ shares in the business or property.
- Tax Coverage: Life insurance can cover capital gains or estate taxes triggered by the transfer, preventing forced sales.
- Simplified Transitions: Ensures smoother ownership handovers—whether for a business, property, or other complex holdings.
This approach supports fairness without forced liquidation—helping keep treasured assets in the family while honouring everyone’s interests.
Addressing Complexity: It’s Easier Than You Think
It’s natural to assume that solving this kind of challenge requires legal restructuring, shareholder agreements, or major estate redesigns. And sometimes, those are part of the solution.
But the good news is: in many cases, a strategic life insurance policy can dramatically simplify the process. With the help of a knowledgeable advisor, these plans can be designed to:
- Align with your will and overall estate plan
- Ensure premiums are affordable and structured effectively
- Minimize tax implications for your heirs
- Coordinate with legal and tax professionals for a seamless solution
The key is having the right guide. At Finuity, we specialize in helping clients plan around their most important legacy assets—making a complex situation more manageable, and giving you the peace of mind that comes from knowing your intentions will be respected.
Common Pitfalls to Avoid
Without proper planning, families often encounter:
- Unequal treatment of heirs, leading to resentment or disputes
- Forced asset sales due to taxes or liquidity issues
- Loss of control over how a business or property is managed or divided
- Unclear intentions, which leave heirs guessing—or fighting—over what should happen
These can all be prevented with proactive planning and the strategic use of life insurance.
Preserve the Asset. Protect the Family.
When it comes to passing down a legacy asset—whether a property, a business, or otherwise—the real goal isn’t just preserving the asset. It’s preserving family harmony, fairness, and the intentions you’ve worked a lifetime to build.
Life insurance is a powerful tool to help make that happen.