Discovered Whole Life Policy Opened as a Minor

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Joined: Fri Mar 09, 2018 6:30 pm

Discovered Whole Life Policy Opened as a Minor

Post by poutine »

We are Canadian GC holders. Non-residents of Canada since 2016.

My mother-in-law just informed us that she opened a whole life policy on my spouse when he was a minor. He is the owner of the policy. She has been paying for it all these years and was under the impression that she owned it. She wants to stop paying for it, but the insurance company wants my spouse to sign surrender paperwork (that’s how we found out). Cash surrender value is $1200. It is a “participating” product from Foresters.

I’m aware that we are likely non compliant on FBAR since we never listed it. Do we also have tax obligations to the IRS? How bad is fixing this situation going to be?

If we let it lapse, will we need to file a Canadian tax return too?

I don’t care about the cash value or the premiums, I just want this to not cost us a lot of money or time to become compliant.
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