The Novel Case of Calmusky v. Calmusky
There are relatively few circumstances in which a court will stifle, rather than vindicate, a deceased person’s testamentary intentions. If a testator wished to give all of his or her assets to a charity for cats, but did not leave adequate funds for his or her dependants, the testator’s will may be varied in order to support the dependants. When a deceased person assigned insurance policy proceeds to his spouse, but previously he had promised an ex-spouse that if she paid the insurance premiums, the proceeds would go to her, the courts interceded, in spite of the designation to the spouse, and awarded the proceeds to the ex-spouse on the basis of unjust enrichment.
In this blog we shall discuss Calmusky v. Calmusky, a recent decision which may have added another context in which courts can upset a deceased person’s testamentary intentions.
Gary and Randy were the sons of Henry, the deceased. In Henry’s last will, he left the residue of his estate to one of Randy’s children and his, Henry’s, nephew. Upon Henry’s death, his interests in bank accounts jointly held between he and Gary were transferred to Gary by right of survivorship. He also made Gary a joint holder of his Registered Income Fund (RIF).
Part of the court’s decision was conventional: since the account transfers were gratuitous transfers between a parent and an adult child, according to Pecore, there is a presumption of resulting trust (with the transferee, Gary, holding the accounts in trust for Henry’s estate) that must be rebutted, with evidence of a donative intent on behalf of the parent, before the transferee can retain the assets. Since Gary could not show donative intent, the bank account funds were to revert to Henry’s estate. And then came the unconventional: the court determined that the rule in Pecore applied to the RIF:
“I see no principled basis for applying the presumption of resulting trust to the gratuitous transfer of bank accounts into joint names but not applying the same presumption to the RIF beneficiary designation.”
By stretching the rule in Pecore to this new context, the court may have burst open floodgates which protect beneficiaries of RIFs, pension plans, life insurance policies, and more. And as was observed in our recent blog on Calmusky, there is “legislation that uniquely applies to beneficiary designations (e.g. the Income Tax Act, the Succession Law Reform Act or the Insurance Act)” that appears to conflict with the decision.
And then there is the policy dilemma arising from Calmusky: if the designation is not good enough, what is? Should an affidavit be executed to corroborate the designation, or should a testator put a provision in his or her will that crystallizes existing beneficiary designations? The trouble with the latter option, which ostensibly seems to be the surest option, is that the subject matter of the beneficiary designation may, since it is mentioned in the will, have to be listed in the probate application and the Estate Information Return – leading to heightened expenses.
The last time that estate solicitors were put in such a dubious position, arguably, was when the court in Re Milne ruled that a will is a trust, thereby rendering “basket clauses”, a common estate solicitor’s tool, precarious or even invalid. Now, while Calmusky stands, there is no clear best practice with respect to bullet-proofing beneficiary designations. And sadly, Gary, who prior to Calmusky would have received the RIF funds, is left disinherited; and Henry, who prior to Calmusky would have had reason to trust in the RIF beneficiary designation, may have had his testamentary intentions frustrated.
Thanks for reading – have a great day,
Ian Hull and Devin McMurtry