A recent amendment to Ontario’s Succession Law Reform Act (the “SLRA”) addresses a specific problem that can arise when an individual becomes incapable before a required plan conversion takes place. The amendment concerns the limited circumstances in which a guardian of property, and by extension an attorney for property, may make a beneficiary designation on behalf of an incapable person.
The change is reflected in new subsections 51(1.1) and 51(1.2) of the SLRA, which address the preservation of existing beneficiary designations where a plan is converted, renewed, replaced, or transferred. The focus of the amendment is on situations where an incapable person had already made a beneficiary designation while capable, but where administrative changes to the plan later require that designation to be restated in order to remain effective.
Many financial instruments that permit beneficiary designations are subject to mandatory or routine conversions later in life. Registered plans, for example, are often required to be converted at a particular age, frequently around age 65. Where an individual remains capable at the time of conversion, they can execute the necessary documentation themselves and confirm or restate their beneficiary designation. Difficulties arose, however, where incapacity occurred before that conversion.
Prior to the amendment, a guardian of property was unable to execute a beneficiary designation, even where the designation merely mirrored what the incapable person had already put in place while capable. As a result, the original designation could fail to carry forward following the conversion. If no valid designation was in place at death, the default result was often that the proceeds became payable to the estate.
That outcome could have significant consequences. Assets that would otherwise have passed outside the estate could become subject to estate administration tax, distributed differently than intended, or exposed to claims that would not have applied had a valid designation been maintained. In practical terms, incapacity at the wrong moment could frustrate clearly expressed intentions.
The reason this change had to be made legislatively lies in the structure of Ontario’s capacity regime. Under the Substitute Decisions Act, 1992 (the “SDA”), guardians of property and attorneys for property are prohibited from making testamentary dispositions on behalf of an incapable person, including making a will. Because beneficiary designations are testamentary in effect, substitute decision‑makers were historically prevented from making or altering them, even where the change was purely administrative.
The amendment to the SLRA creates a narrow exception to that general prohibition. Under s. 51(1.1), a guardian of property may now make a beneficiary designation only where the incapable person had already made that designation while capable, and only to the extent necessary to carry it forward following a plan conversion, renewal, replacement, or transfer. New s. 51(1.2) clarifies that this limited authority does not constitute impermissible will‑making for the purposes of the SDA.
These limits remain firm. The amendment does not permit guardians or attorneys to engage in estate planning on behalf of an incapable person. Its scope is confined to preserving an existing expression of intention, not creating or modifying one. This bright‑line approach reflects continued concern about allowing substitute decision‑makers to make dispositive decisions in the absence of capacity.
Although the amendment is framed in terms of guardians of property, the same statutory framework governs attorneys acting under powers of attorney. The SDA applies to both guardians and attorneys, and the constraints on testamentary decision‑making continue to apply equally.
The amendment addresses a defined scenario where incapacity would otherwise prevent the preservation of an existing beneficiary designation following a plan conversion. It allows previously expressed intentions to be respected, while maintaining the broader prohibition against substitute decision‑makers making substantive testamentary decisions. While narrow in scope, the change mitigates the risk of unintended consequences arising from administrative plan requirements intersecting with incapacity.
Thanks for reading!