A person can designate a beneficiary to one’s RRIF or RRSP account by signing a beneficiary designation. These designations can be done in a stand-alone document, or can be included in one’s will.
A recent case explored some of the issues that can arise when making a beneficiary designation.
In Hayduk v. Gudz, 2022 ONSC 2249 (CanLII), the deceased died leaving a will dated August 16, 2012. In her will, the deceased directed that the balance of her RRIF held with Nesbitt Burns be paid into a trust for the benefit of her granddaughter. The will specifically referred to the Nesbitt Burns account number.
Unfortunately, the deceased did not have a Nesbitt Burns RRIF at the time of her death. In addition, the deceased had made a prior designation of her BMO RRIF to her daughter, not her granddaughter.
On application by the estate trustee for advise and directions, the court addressed the issues.
Firstly, the court determined that the deceased intended to create a trust for the granddaughter using the funds in the BMO RRIF. The court applied the principle of falsa demonstratio non nocet, cum de corpore (or persona) constat. Under this principle, the court can reject part of a description of an object or subject if part of the description is true and the other is false. The false part of the description will be disregarded if the true part of the description describes the subject or object with sufficient certainty. In the present case, the direction regarding the RRIF was true and certain. The deceased had no other RRIF. The deceased had closed the Nesbitt Burns account about a month before making the will, and opened the BMO RRIF account. The court was able to reject the part of the designation referring to Nesbitt Burns and the account number.
Secondly, the court held that the later designation of the beneficiary designation in the will in favour of the granddaughter superseded the prior designation in favour of the daughter. The court applied s. 52(2) of the Succession Law Reform Act which provides that a later designation revokes an earlier designation.
The application for directions might have been avoided if resort to the falsa demontratio principle was not needed. When drafting, testators and their advisors must be careful to ensure that the subject matter of beneficiary designations is accurately described.
Thanks for reading.