In a recent case involving the Estate of Theresa Lorraine Crumb, the effectiveness of a general revocation clause in her will came under scrutiny. The central issue was whether the clause could revoke beneficiary designations for her Registered Retirement Income Fund and Tax-Free Savings Account plans. Section 52(1) of the Succession Law Reform Act (“SLRA”) stipulates that a revocation in a will must expressly relate to the designation, either generally or specifically, for it to be effective.
The application judge ruled that the general revocation clause in Ms. Crumb’s will did not expressly relate to the beneficiary designations made by instrument for her RRIF and TFSA plans. As a result, the revocation was deemed ineffective, and the designations remained intact. The Ontario Court of Appeal also dismissed the appeal against this decision.
Background
Ms. Crumb, the testator, passed away in 2020, leaving behind a will that included a general revocation clause. The clause aimed to revoke all testamentary dispositions made by the testator in the past. The contentious matter arose concerning the RRIF and TFSA plans, with the appellants arguing that the general revocation clause should include these designations made by instruments.
Legal Framework
The legal dispute hinged on s. 52(1) of the SLRA, which stipulates that a revocation in a will is effective only if it expressly relates to the designation made by an instrument. The application judge, in alignment with previous legal precedent, held that the general revocation clause did not explicitly relate to the specific designations of beneficiaries for the RRIF and TFSA plans.
Findings
The application judge’s decision was rooted in the court’s previous ruling in Laczova Estate v. Madonna House, emphasizing the requirement for explicit reference to the designation in the revocation clause. The judge rejected an alternative argument made by the Estate Trustee in Laczova that the scheme of the will impliedly revoked the original designations, citing s. 52(1) of the SLRA.
The application judge also considered Ashton Estate v. South Muskoka Memorial Hospital Foundation “plainly wrong” and concluded that the decision should not be followed.
The Appeal
The appeal raised two key issues firstly, whether the application judge correctly found the general revocation clause ineffective due to its lack of express reference to prior designations, and secondly, whether the decision in Ashton Estate set a precedent for a general revocation clause that was correct.
Drawing on the principles established in Laczova, the Appellate Court reaffirmed that a revocation clause must expressly relate to the designation, either generally or specifically. The Court noted that while “the result in Ashton Estate appears nevertheless to be correct under s. 52(2) of the SLRA” the application judge in this case “was correct to find that the interpretation of the general revocation clause should not be followed, noting that it failed to consider the requirement of an express reference in the revocation clause.
Ultimately, the Ontario Court of Appeal upheld the application judge’s decision, asserting that the general revocation clause in Ms. Crumb’s will was not effective in revoking the beneficiary designations of the RRIF and TFSA plans.
Conclusion
The case serves as a reminder of the nuanced legal interpretation required for revocation clauses in wills, especially concerning designated beneficiaries of financial plans.
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