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Estates - Wills - General Revocation

. Alger v. Crumb

In Alger v. Crumb (Ont CA, 2023) the Court of Appeal considered the SLRA s.52(1) provision regarding 'general revocation clauses':

Issue 1: Was the application judge correct in law by finding that the general revocation clause in the testator’s will failed to expressly refer to the prior designations of beneficiaries by instrument(s) and therefore was not effective under s. 52(1) of the SLRA to revoke those designations?

[12] The SLRA was enacted in 1977 and replaced four statutes. Part I “Testate Succession” replaced the Wills Act, S.O. 1966, c. 433; Part II “Intestate Succession” replaced parts of the Devolution of Estates Act, R.S.O. 1970, c. 129; Part IV “Survivorship” replaced the Survivorship Act, R.S.O. 1970, c. 454; and Part V “Support of Dependents” replaced the Dependents’ Relief Act, R.S.O. 1970, c. 126.

[13] Part III “Designation of Beneficiaries of Interest in Funds or Plans” contains new provisions that specify how a person who owns certain defined plans or funds can designate a beneficiary to receive the plan or fund on the person’s death.[1] Section 50 defines a “plan” to include an RRIF and a TFSA as defined under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp).[2]

[14] Sections 51 and 52 of the SLRA govern a participant’s designation and revocation of a designation of beneficiaries of a benefit payable under a plan on the death of the participant. Section 53 deals with payment of the benefit under the plan to the designated beneficiary and enforcement. The definition of “participant” in s. 50, as well as ss. 51, 52 and 53 provide:

50 In this Part, “participant” means a person who is entitled to designate another person to receive a benefit payable under a plan on the participant’s death;

...

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.

...

(2) A designation in a will is effective only if it relates expressly to a plan, either generally or specifically.

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.

(2) Despite section 15, a later designation revokes an earlier designation, to the extent of any inconsistency.

(3) Revocation of a will revokes a designation in the will.

(4) A designation or revocation contained in an instrument purporting to be a will is not invalid by reason only of the fact that the instrument is invalid as a will.

(5) A designation in an instrument that purports to be but is not a valid will is revoked by an event that would have the effect of revoking the instrument if it had been a valid will.

(6) Revocation of a designation does not revive an earlier designation.

(7) Despite section 22, a designation or revocation in a will is effective from the time when the will is signed.

53 Where a participant in a plan has designated a person to receive a benefit under the plan on the death of the participant,

(a) the person administering the plan is discharged on paying the benefit to the person designated under the latest designation made in accordance with the terms of the plan, in the absence of actual notice of a subsequent designation or revocation made under section 51 but not in accordance with the terms of the plan; and

(b) the person designated may enforce payment of the benefit payable to him under the plan but the person administering the plan may set up any defence that he could have set up against the participant or his or her personal representative. [Emphasis added.]

[15] Section 51 of the SLRA sets out the approach to designations in Ontario. Under s. 51(1), a participant is able to designate a beneficiary of a benefit payable under a plan on the participant’s death through two mechanisms: (a) a signed instrument, or (b) by will. Where a party elects to designate a beneficiary by will, the designation is only effective “if it relates expressly to a plan, either generally or specifically”: SLRA, at s. 51(2). A later designation will revoke an earlier designation where there is inconsistency: SLRA, at s. 52(2).

[16] Section 52 of the SLRA sets out the approach to revocations in Ontario. Participants may revoke a designation of a beneficiary through the two mechanisms set out above for designations: SLRA, at s. 51(1). However, a revocation in a will is only effective to revoke a designation made by instrument where it relates “expressly to the designation, either generally or specifically.” Whereas s. 51(2) requires that a designation by will relate expressly to a plan, s. 52(1) requires that a revocation in a will relate expressly to the designation.

[17] The designation and revocation provisions in the SLRA were considered by this court in Laczova. In that case, the testator had purchased retirement savings plans at two banks and had designated by instrument four members of her family as beneficiaries on her death. However, less than one month before she died, the testator executed a holograph will, where she listed all her assets, including the retirement savings plans, and made bequests to the four family members as well as to 18 other legatees including a number of charities. The will did not contain a revocation clause, a designation of beneficiaries of the plans, or a granting clause by which the testator gave all of her property to her executor and trustee to carry out the will’s instructions. The will did not vest the plans, or any of the listed assets, in anyone. Upon her death, the testator’s estate trustee took the position that the will revoked the earlier designations and applied to the court for directions.

[18] The estate trustee made two submissions. The first was that the references in the will to the plans constituted designations relating expressly to the plans either generally or specifically under s. 51(2), and therefore the earlier designations were revoked in accordance with s. 52(2).

[19] In considering that argument, Catzman J.A. assumed, without deciding, that listing the plans in the will was sufficient to constitute the express relation to a plan required by s. 51(2). However, the argument failed because there was no “designation” of anyone as a beneficiary contained in the terms of the will as required by both s. 51(2) and s. 52(2). Catzman J.A. rejected the argument that the listing of the plans constituted an implicit designation, pointing out that payment under s. 53 requires the plan administrator to be able to ascertain who is designated to receive it. In the case of the holograph will, it would continue to be unclear who would be the implicit designees.

[20] Catzman J.A. distinguished the case of Burgess v. Burgess Estate (2000), 52 O.R. (3d) 61 (C.A.), 2000 CanLII 16989, where the contest was between two beneficiary designations, both by instruments, and where this court observed that the SLRA does not set out any requirements for a revocation by instrument. In distinguishing the decision, Catzman J.A. relied on the fact that designation and revocation by will and by instrument are treated differently in the statute: designation and revocation by will “carry with them certain statutory prerequisites”, whereas designation and revocation by instrument do not: Laczova, at para. 25.

[21] The estate trustee’s alternative argument in Laczova was that the scheme of the will impliedly revoked the original designations by instrument under s. 52(1) of the SLRA. Catzman J.A. rejected this submission as well. He explained at para. 29:

A careful reading of s. 52(1) is sufficient to dispose of this alternative argument. Whereas s. 51(2) requires that a designation by will must relate “expressly to a plan, either generally or specifically”, s. 52(1) requires that a revocation in a will must relate “expressly to the designation, either generally or specifically”. But, as Ms. Carnevale acknowledged, nowhere in the deceased’s will is there any expression that relates to either of the previous designations in favour of her family members. By its very language, s. 52(1) renders a revocation in a will that fails to relate expressly to the designation made by instrument ineffective to accomplish that purpose. That language is fatal to Ms. Carnevale’s alternative argument. [Emphasis in original.]

[22] To summarize, the following propositions of interpretation have been established in the Laczova case: 1) The SLRA sets out statutory requirements for the designation of a beneficiary by will and for the revocation of a beneficiary designation by will, that are not required for such a designation or revocation when done by instrument; 2) Specifically, a designation of a beneficiary by will must relate expressly, whether generally or specifically, to the plan (s. 51(2)), while a revocation by will of a beneficiary designation that was made by instrument must relate expressly, whether generally or specifically, to the designation (s. 52(1)).

[23] The issue on this appeal arises under s. 52(1) because it relates to the effectiveness of the general revocation clause to revoke the beneficiary designations made by instrument in favour of all four of the testator’s children.

[24] The first question in interpreting the clause is whether the term “testamentary dispositions” includes the designations of beneficiaries by instrument of the RRIF and TFSA plans. In MacInnes v. MacInnes, [1935] S.C.R. 200, 1934 CanLII 16, the Supreme Court held that the designation of a beneficiary under an employee benefit plan to receive the proceeds of the plan on death is a testamentary disposition, the test being whether the intent of the maker was that the gift be dependent on the maker’s death: at para. 14. That case has been interpreted and relied on subsequently to apply to an RRSP beneficiary designation: see Amherst Crane Rentals Ltd. v. Perring (2001), 241 D.L.R. (4th) 176 (Ont. C.A.), 2004 CanLII 18104, leave to appeal to S.C.C. refused, [2004] S.C.C.A. No. 430. I therefore agree with the application judge that the designations of beneficiaries by instrument(s) of the RRIF and TFSA plans are testamentary dispositions and therefore are included within the meaning of that term as used in the general revocation clause of the will.[3]

[25] The remaining question is whether the revocation of “all…Testamentary dispositions of every nature and kind whatsoever” relates “expressly to the designation, either generally or specifically.” This statutory requirement has two components for the revocation to be effective: 1) it must relate to the designation, as opposed to the plan; and 2) it must relate to the designation “expressly…, either generally or specifically”.

(1) The clause relates to the designation

[26] As a beneficiary designation by instrument is a testamentary disposition at law, by referring to all testamentary dispositions, the general revocation clause in this case does relate to the designation and therefore the first criterion is satisfied.

(2) The clause does not relate to the designation “expressly”

[27] In Laczova, as I noted above, Catzman J.A. was prepared to assume for the purposes of the decision that listing the plans at issue in the will was sufficient to satisfy the requirement in s. 51(2) for designation of a beneficiary in a will, that the designation must relate “expressly” to a plan, although he queried that conclusion: Laczova, at para. 18. He did not need to decide the issue because the decision turned on the fact that even if the “expressly” requirement was satisfied, there was no designation of a beneficiary in the will.

[28] To be clear, in Laczova, Catzman J.A. was considering whether listing the plans satisfied the “expressly” requirement for a valid designation of beneficiary in the will, not for a valid revocation of a designation, when he was discussing s. 51(2): see Laczova, at paras. 16-27. Therefore, whether a list of RRIF or TFSA plans would be considered to relate expressly to a designation, as required by s. 52(1) for a valid revocation, as opposed to expressly to a plan under s. 51(2), did not arise. Nor does the issue arise directly in this revocation case, as there is no list of the RRIF or TFSA plans in the will.

[29] The only reference to any beneficiary designations is the reference to testamentary dispositions. The question is whether that reference satisfies the requirement of relating “expressly…, either generally or specifically”, to the designations by instrument, sufficiently to revoke them pursuant to s. 52(1).

[30] Although the phrase “testamentary dispositions” is a category of instruments that include designations of beneficiaries for an RRIF or TFSA plan, it cannot be said to be an express reference to them. To give the term “expressly” any effect, it must mean something beyond a general category. I note that the thesaurus feature of Microsoft Word gives the following synonyms for the word “expressly”: specifically, particularly, explicitly, clearly, definitely, deliberately, and unambiguously.[4] All of these synonyms support the conclusion that reference to a general category that includes the thing to be referred to is not an express reference to that thing.

[31] Nor does the addition of the words “either generally or specifically” add any weight to the argument. An express reference to a beneficiary designation, that refers to it “generally” as opposed to “specifically”, must still refer expressly to the beneficiary designation that is intended to be referenced, not just to a category that includes it.

[32] While it is not necessary to decide what forms of wording may comply with that requirement, an example of wording that would have been sufficiently express and general is:

I hereby revoke any and all beneficiary designations by instrument that I have heretofore made on any fund or plan as defined in the Succession Law Reform Act.

[33] And an example of wording that would have been sufficiently express and specific is:

I hereby revoke the beneficiary designations on my RRIF and TFSA accounts at Scotiabank.

[34] As the general revocation clause in the testator’s will does not relate expressly to the beneficiary designations made by the testator for her RRIF and TFSA plans, it does not comply with s. 52(1) of the SLRA, and it is therefore not effective to revoke the designations of beneficiaries by instrument(s) of the RRIF and TFSA plans. The application judge was correct in so concluding.