Beneficiary designations can be an excellent tool for estate planning, since assets handled this way do not have to go through probate. Did you know that there are a variety of ways that beneficiary designations can be revoked? Four different instruments that can be used to revoke a beneficiary designation are discussed below.
Wills
Subection 52(1) of the Succession Law Reform Act, R.S.O. c. S.26 (the “SLRA”) provides that a will may revoke a beneficiary designation, but “only if the revocation relates expressly to the designation, either generally or specifically.” This means that a general revocation clause in a will can revoke a beneficiary designation, as long as the clause expressly refers to prior designations: see Alger v. Crumb, 2023 ONCA 209.
A specific bequest in a will can also revoke a prior beneficiary designation, as long as they both dispose ofthe same asset. In Hayduk v. Gudz, 2022 ONSC 2249, for example, the deceased had a RRIF that was the subject of a beneficiary designation and was also disposed of through a specific bequest in her will. Each instrument named a different beneficiary for the RRIF. Since the will was executed after the beneficiary designation, the bequest in the will was honoured, even though the RRIFwas described with the wrong account number in the will. In this case, the court relied on subsection 52(2) of the SLRA, which states that “a later designation revokes an earlier designation, to the extent of any inconsistency.”
New beneficiary designations
A new beneficiary designation will also revoke a prior designation, even if the new designation is not shared with the institution holding the affected asset – the SLRA does not require a designation to be filed or registered with the institution.
A new beneficiary designation that is lost can also be honoured, as long as there is a copy of the designation, as demonstrated by the court’s decision in Ray-Ellis v. Goodtrack et al., 2021 ONSC 3102. The deceased in this case changed the beneficiary designation for his pension after getting a divorce – the original designation named his ex-wife as the beneficiary. Justice Gilmore found that the beneficiary designation change form that the deceased completed was valid, even though the original form could not be found and there was no record of the deceased having returned the form to the institution holding the pension.
Legal instruments incidental to divorce
If the beneficiary named in a beneficiary designation is the former spouse of the deceased, that instrument may be revoked by documents signed as part of the parties’ divorce. Returning to the court’s decision in Ray-Ellis, Justice Gilmore held that the beneficiary designation for the deceased’s pension was also revoked by a general release executed as part of the parties’ divorce settlement, even though the release did not expressly refer to the beneficiary designation. Since the deceased and his ex-wife renounced any interest or entitlement they could have in each other’s estates in the release, it was not necessary to attach a specific list of affected property to it.
However, for documents executed pursuant to a divorce to effectively revoke a beneficiary designation, it appears that the parties must expressly relinquish all interest in each other’s estates. In Knowles v. LeBlanc, 2021 BCSC 482, the British Columbia Supreme Court found that a consent order related to the settlement of a divorce did not revoke a beneficiary designation naming the deceased’s former spouse since it did not refer to a “full and final settlement” or a relinquishment of the parties’ claims.
Non-compliant testamentary instruments
It also seems probable that a document or writing which the court declares to be valid and fully effective as a will under section 21.1 of the SLRA could revoke a beneficiary designation, although this question has not yet addressed by the courts in Ontario.
Thank you for reading, and have a great day!