When Can a Will Revoke Beneficiary Designations?
In the decision of Alger v. Crumb[1] (“Alger v. Crumb”), the Court of Appeal considered whether a general revocation clause in a Will was sufficient to revoke beneficiary designations.
The testator, Theresa Lorraine Crumb (the “Deceased”) executed a Last Will and Testament dated May 9, 2019 (the “Will”). In the Will, there was a revocation clause that read:
“I HEREBY REVOKE all Wills and Testamentary dispositions of every nature and kind whatsoever made by me heretofore made”.[2]
The Deceased had four children, including the Applicants Sherri and Teresa and the Respondents Robert and Karen. The Respondents were appointed as Estate Trustees pursuant to the Will.
The Deceased had a Registered Retirement Income Fund (“RRIF”) and Tax-Free Savings Account (“TSFA”). On her date of death, the balance of the RRIF account was $34,000.00 and the balance of the TSFA was $65,000.00. Both provided that the funds were to be designated to all four children in equal shares.[3]
The Application sought, among other things, that the Applicant’s 25% shares in the RRIF and TSFA accounts be transferred to them. The Respondents maintained that the Will had revoked the beneficiary designations for the RRIF and TSFA accounts.
The Law
Of central importance here are sections 51(1) and 52(1) of the Succession Law Reform Act[4] (“SLRA”). The sections provide:
51 (1) A participant may designate a person to receive a benefit payable under a plan on the participant’s death,
(a) by an instrument signed by him or her or signed on his or her behalf by another person in his or her presence and by his or her direction; or
(b) by will,
and may revoke the designation by either of those methods.
52 (1) A revocation in a will is effective to revoke a designation made by instrument only if the revocation relates expressly to the designation, either generally or specifically.
(emphasis added)
The issue for the Superior Court at first instance was whether the general revocation clause related expressly to the RRIF and TFSA designations, either generally or specifically, as required by section 52 of the SLRA. The court broke down their analysis into two questions:
- Are the designations “testamentary dispositions”?
- If so, does the general revocation clause “expressly” relate to those designations?
1) Do the RRIF and TSFA designations count as “testamentary dispositions”?
The general revocation clause only revokes the RRIF and TSFA designations if they fit within this definition of “testamentary dispositions”. A testamentary disposition is generally construed as a gift of any property by a testator under the terms of a Will. The court found that it is settled law in Ontario that designations such as RRIFs and TSFAs qualify as testamentary dispositions.[5]
The court cited the decision in MacInnes v. MacInnes[6], which held that a document made outside of a will that designated a beneficiary to a profit-sharing fund constitutes a ‘testamentary document’ and as such, a testamentary disposition. The test is whether the intent of the maker was that the gift be dependent on the maker’s death.[7]
2) Does the general revocation clause relate “expressly” to the designations “either generally or specifically”?
The Superior Court answered in the negative, finding that the revocation clause did not revoke the RRIF and TSFA designations.
It found that there is no express reference in the Will’s revocation clause to either the RRIF designation or the TFSA designation. Moreover, there is no reference to any beneficial designations generally. While beneficial designations fall under the category of “testamentary dispositions” – the court found that it would be a stretch to find that mentioning that broad category amounted to “expressly” referencing the RRIF or TFSA designations, either generally or specifically.[8]
As the RRIF and TSFA account designations stood, the Superior Court ordered that the Estate Trustees pay out the funds held in accordance with the designations.[9] On appeal, the Court of Appeal found that the Superior Court had used the correct law and applied it correctly. As such, the appeal was dismissed, and the beneficiary designations stood.[10]
Summary
The case of Alger v. Crumb is useful in reminding estate planners and testators on the level of specificity that is required to revoke beneficiary designations in Ontario. It is because of section 52 of the SLRA that precision is required.
—
[1] Alger v. Crumb, 2023 ONCA 209 (“Alger”)
[2] Alger v. Crumb et al., 2021 ONSC 6076 (CanLII) (“Alger”) at para 4
[3] Alger at para 3
[4] RSO 1990, c S.26
[5] Amherst Crane Rentals Ltd v. Perring (2004) CanLII 18104 (ONCA)
[6] [1935] S.C.R.20021
[7] Ibid at para 14
[8] Alger at paras 12 and 13
[9] Alger at para 32
[10] Alger v. Crumb, 2023 ONCA 209 at para
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Written by: Oliver O'Brien
Posted on: November 30, 2023
Categories: Commentary, WEL Newsletter
In the decision of Alger v. Crumb[1] (“Alger v. Crumb”), the Court of Appeal considered whether a general revocation clause in a Will was sufficient to revoke beneficiary designations.
The testator, Theresa Lorraine Crumb (the “Deceased”) executed a Last Will and Testament dated May 9, 2019 (the “Will”). In the Will, there was a revocation clause that read:
“I HEREBY REVOKE all Wills and Testamentary dispositions of every nature and kind whatsoever made by me heretofore made”.[2]
The Deceased had four children, including the Applicants Sherri and Teresa and the Respondents Robert and Karen. The Respondents were appointed as Estate Trustees pursuant to the Will.
The Deceased had a Registered Retirement Income Fund (“RRIF”) and Tax-Free Savings Account (“TSFA”). On her date of death, the balance of the RRIF account was $34,000.00 and the balance of the TSFA was $65,000.00. Both provided that the funds were to be designated to all four children in equal shares.[3]
The Application sought, among other things, that the Applicant’s 25% shares in the RRIF and TSFA accounts be transferred to them. The Respondents maintained that the Will had revoked the beneficiary designations for the RRIF and TSFA accounts.
The Law
Of central importance here are sections 51(1) and 52(1) of the Succession Law Reform Act[4] (“SLRA”). The sections provide:
51 (1) A participant may designate a person to receive a benefit payable under a plan on the participant’s death,
(a) by an instrument signed by him or her or signed on his or her behalf by another person in his or her presence and by his or her direction; or
(b) by will,
and may revoke the designation by either of those methods.
52 (1) A revocation in a will is effective to revoke a designation made by instrument only if the revocation relates expressly to the designation, either generally or specifically.
(emphasis added)
The issue for the Superior Court at first instance was whether the general revocation clause related expressly to the RRIF and TFSA designations, either generally or specifically, as required by section 52 of the SLRA. The court broke down their analysis into two questions:
1) Do the RRIF and TSFA designations count as “testamentary dispositions”?
The general revocation clause only revokes the RRIF and TSFA designations if they fit within this definition of “testamentary dispositions”. A testamentary disposition is generally construed as a gift of any property by a testator under the terms of a Will. The court found that it is settled law in Ontario that designations such as RRIFs and TSFAs qualify as testamentary dispositions.[5]
The court cited the decision in MacInnes v. MacInnes[6], which held that a document made outside of a will that designated a beneficiary to a profit-sharing fund constitutes a ‘testamentary document’ and as such, a testamentary disposition. The test is whether the intent of the maker was that the gift be dependent on the maker’s death.[7]
2) Does the general revocation clause relate “expressly” to the designations “either generally or specifically”?
The Superior Court answered in the negative, finding that the revocation clause did not revoke the RRIF and TSFA designations.
It found that there is no express reference in the Will’s revocation clause to either the RRIF designation or the TFSA designation. Moreover, there is no reference to any beneficial designations generally. While beneficial designations fall under the category of “testamentary dispositions” – the court found that it would be a stretch to find that mentioning that broad category amounted to “expressly” referencing the RRIF or TFSA designations, either generally or specifically.[8]
As the RRIF and TSFA account designations stood, the Superior Court ordered that the Estate Trustees pay out the funds held in accordance with the designations.[9] On appeal, the Court of Appeal found that the Superior Court had used the correct law and applied it correctly. As such, the appeal was dismissed, and the beneficiary designations stood.[10]
Summary
The case of Alger v. Crumb is useful in reminding estate planners and testators on the level of specificity that is required to revoke beneficiary designations in Ontario. It is because of section 52 of the SLRA that precision is required.
—
[1] Alger v. Crumb, 2023 ONCA 209 (“Alger”)
[2] Alger v. Crumb et al., 2021 ONSC 6076 (CanLII) (“Alger”) at para 4
[3] Alger at para 3
[4] RSO 1990, c S.26
[5] Amherst Crane Rentals Ltd v. Perring (2004) CanLII 18104 (ONCA)
[6] [1935] S.C.R.20021
[7] Ibid at para 14
[8] Alger at paras 12 and 13
[9] Alger at para 32
[10] Alger v. Crumb, 2023 ONCA 209 at para
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