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Designation of Beneficieries – Wills by Paljinder Mahaar

Designation of Beneficieries – Wills by Paljinder Mahaar

Designation and Revocation of Beneficiaries under insurance Plans and Policies:

The middle class has a great deal of wealth invested in various insurance policies, such as TFSA, RESP, RRSP, Life insurance, etc., which should not be ignored. Designation, change or confirmation of a beneficiary for registered plans or insurance policies in your will is part of your plan for distributing of your assets.
Part II of the Succession Law Reform Act governs the designation of beneficiaries of interest in funds or plans, including RRSPs and RFIFs. Section 51 of the legislation states that a participant my designate a person to receive benefit under a plan on the participant’s dealth by a document the person signed or by a Will. The person may revoke the desinations by eather of these methods. However, the designation in a Will is only effective if it specifically and expressly relates to the plan.
Suppose you wish to revoke a designation of a beneficiary under any of your plan, Sec 52 (1) of SLRA states that a revocation through a Will is valid to revoke a designation made through benificiary designation in a insurance or other plan,if the revocation expressly mentions the designaation. As such, pursuant to s.52 of the SLRA, a beneficiary designation for a plan will only be revoked by a Will, if the Will “relates expressly to the designation”.

In a recent decision, Alger et al., v. Crumb et al., 2021, the deceased designated that the funds in her RRIF and the TFSA accounts were to be paid to her four children in equal shares. After designating beneficiaries, the deceased signed her last Will, including the general revocation class. Neither the RRIF nor the TFSA are explicitly mentioned in the Will. The only possible reference to them was in the opening clause of the Will, which reads, “I HEREBY REVOKE all Wills and Testamentary dispositions of every nature and kind whatsoever made by me heretofore made”. The court deliberated whether the standard revocation clause in the case at bar was insufficient to revoke the RRIF and TFSA designations. The court found that the standard revocation clause was insufficient to revoke the RRIF and TFSA designations, and the beneficiary will receive their shares as per their designation in the plans and not in Will.

Your ability to designate a beneficiary for your policies and plans may also depend on federal and provincial legislation. For example, under Ontario pension laws, only a spouse at the time of an employee’s death who dies before retirement can be a beneficiary. However, if the employee dies after retirement, a beneficiary could be different than a spouse, if the beneficiary was altered specifically. Only a named beneficiary under the insurance policy will get the benefits not the estate.

Paljinder Mahaar
Barrister & Solicitor