As our readers will know, early last year, Section 21.1 was added to the Succession Law Reform Act to permit judges of the Ontario Superior Court of Justice to validate “a document or writing that was not properly executed or made” if it “sets out the testamentary intentions of a deceased or an intention of a deceased to revoke, alter or revive a will of the deceased“.

This means that wills or other documents made under the Succession Law Reform Act may be validated by the court, whether they are substantially compliant with the formal requirements for valid execution or not.  Last month, David Smith blogged about Grattan v Grattan, in which an unsigned will was validated by the Court and admitted to probate.

As I blogged about earlier this week, the Succession Law Reform Act addresses beneficiary designations, amendments, and revocations for “plans”. While I am not aware of any cases on point, it would appear that Section 21.1 could be applied to validate a beneficiary designation, amendment, or revocation of a plan if contained in a will that sets out the deceased’s testamentary intentions. The definition of plan under Section 50 includes pensions, RRSPs, RRIFs, and home ownership savings plans. Notably absent from this list are beneficiary designations for life insurance policies.

Beneficiary designations for life insurance policies are governed instead by the Insurance Act. A beneficiary designation for life insurance is to be made by way of a signed declaration. Pursuant to the definition of “declaration” under subsection 171(1), a declaration should identify the contract and the insurance policy, designate, alter, or revoke the designation of a beneficiary, and be signed by the insured. However, the Insurance Act (at subsection 190(1.1)) also specifies that, notwithstanding the terms of the Succession Law Reform Act, the declaration may be signed electronically (subsection 21.1(2) appears to specifically exclude the validation of electronic wills).

Interestingly, the Insurance Act includes terms (at section 192) relating to a scenario in which a valid beneficiary designation is made within a will that is otherwise invalid, but not the opposite situation or the possible impact of Section 21.1 on the validity of a life insurance beneficiary designation. This raises the question of whether there is potential for a will to be validated while a beneficiary designation made within it is not. Particularly within the context of life insurance and different statutory provisions relating to beneficiary designations for these policies, a scenario in which parts of an estate plan (most gifts and residuary clauses under a will) are validated while others (a life insurance beneficiary designation, whether under a will or a standalone document) are not, appears to be possible. With the common use of life insurance as an important part of an estate plan to equalize gifts, ensure liquid assets are available to those who will need to attend to payment of tax and other liabilities, and for a number of other purposes, the result could be an estate plan that does not function as planned.

It will be interesting to see whether and, if so, how courts may deal with the issue of the validation of wills containing beneficiary designations in the future. For now, however, this may be another reason to consider alternatives to changing the beneficiaries of life insurance policies and registered plans under wills, such as the use of standalone documents.

Have a great weekend,

Nick Esterbauer