In Higgins, the payment of death benefits under a London Life segregated fund to named beneficiaries (the daughters of the tax debtor) was found not to constitute a transfer by the estate to which s. 160 could apply given that London Life, in paying such benefits, was fulfilling a direct obligation to them under what Rowe DJ characterized as being predominantly an insurance policy. Is CRA following Higgins? CRA stated:
Although the analysis was needed in a different setting, in Orpin v. Littlechild et al, (2011 ONSC 7695), the Ontario Superior Court of Justice was also faced with having to decide whether the life insurance policy or the investment product features were predominant in a similar segregated fund policy, structured as an RRSP. Here, the Court held that the investment product features were predominant.
These federal and provincial court decisions could be fact-driven or a sign of unsettled case law with respect to how segregated funds offered by insurers may be characterized. Therefore, with so many unique financial products, and various legislation governing them, the application of section 160 of the Act is decided on a case-by-case basis.