Day: June 10, 2014
Feature Blogger: Reché McKeague
Law reform publications are, as I have mentioned before, great research sources. To raise your awareness of the various law reform agencies and their publications, I will, on occasion, post summaries of the more recent releases.
Today, I would like to bring the March 2014 release of the Alberta Law Reform Institute’s Final Report 104 – Beneficiary Designations by Substitute Decision Makers to your attention. This Report makes recommendations to ensure testamentary wishes, expressed as beneficiary designations, are respected upon death. From the Report:
One of the simplest methods to pass the benefits or proceeds of a plan or policy outside a will is to designate who should be the beneficiary on the owner’s death. Beneficiary designations are commonly used for RSPs, RIFs, LIRAs, TFSA, pension plans and insurance policies. Designations can be made, changed or revoked as long as the owner has testamentary capacity. The problem, however, is that once that capacity is lost it is not clear whether a substitute decision maker has the authority to manage beneficiary decisions on behalf of the owner.
The law currently offers little guidance with respect to the powers of an attorney acting under a power of attorney or a trustee acting under a trusteeship order to make, change or revoke beneficiary designations on behalf of the donor or represented adult. As a result, banks, pension fund managers and insurance companies have inconsistent policies which may increase uncertainty and hardship for all parties involved.
As the population ages and increasingly requires substitute decision making, institutions that manage RSPs, RIFs, LIRAs, TFSAs, pension plans and insurance policies – and eventually courts – are likely to be confronted with this issue more often. Steps could be taken to update the legislation to facilitate managing beneficiary designations for a person who has lost capacity. This result can be achieved without undermining the general prohibition against delegation of testamentary powers.
This report recommends legislative changes to ensure that testamentary wishes are respected. The most common situation is when an attorney or trustee needs to transfer a plan or policy from one institution or company to another, or to convert an RSP to an RIF when the owner attains age 71. The first recommendation would clarify the law by expressly allowing an attorney or a trustee to make an administrative change on behalf of the donor or represented adult by designating any beneficiary named under a plan or policy when renewing, replacing or converting that plan or policy.
Another situation where the inability to update beneficiary designations may produce unexpected and unfair results is the beneficiary designation in favour of a former spouse or adult interdependent partner. There is a common misconception that such a designation is revoked at the end of a marriage or an adult interdependent partnership. But this is not the case. While a gift in a will to a spouse or adult interdependent partner is revoked as though the former spouse or adult interdependent partner had predeceased the testator, a beneficiary designation remains in effect unless the plan or policy owner takes some positive action to change that designation. If the owner has lost the capacity to designate a new beneficiary – and the attorney or trustee does not have the authority to make, change or revoke the designation – the former spouse or adult interdependent partner will continue to benefit. The same will happen if the plan or policy owner forgets to revoke the unwanted beneficiary designation. The second aspect of our recommendations would clarify the law by making it consistent with the approach taken with respect to gifts in a will.
There are other issues related to designating beneficiaries under a plan or policy. The aim of the report, however, is not to make a statutory regime for beneficiary designation. Although limited in scope, our recommendations address what we consider to be the most common issues with respect to the management of beneficiary designations by substitute decision makers while ensuring overall policy coherence in the treatment of beneficiary designations and other testamentary gifts.
For information on beneficiary designations in Saskatchewan, you may refer to:
- Kevin Jaques (update), Carol-Anne Cockburn & David Flett, Saskatchewan, Wills and Trust Planning at 13-14, online: CBA, <http://www.cba.org/cba/sections_wills/pdf/Saskatchewan.pdf>.
- Yens Pedersen, “The Perils of Joint Ownership and Beneficiary Designations” in Wills & Estates April 17 & 18, 2012 (Regina: Law Society of Saskatchewan CPD, 2012).
By Melanie Hodges Neufeld
Beginning this fall, the CBA will be offering a Legal Research Section in Saskatchewan. This Section supports the professional development of lawyers who conduct legal research and wish to maintain and hone their research skills. The section is relevant to those who practice in the private and public bar; legal counsel to courts, tribunals, law reform and other legal institutes; legal educators; legislative drafters; and law librarians. Members are kept up-to-date on rapidly developing research methodologies and sources of law. Session topics include research resources and processes, and substantive legal topics.
Reche McKeague (Law Reform Commission) will chair the North Section in Saskatoon and Melanie Hodges Neufeld (Law Society Library) will chair the South Section in Regina. Luncheon meetings will be held between October and May on the second Tuesday of each month. Scheduled speakers include:
- Melanie Hodges Neufeld (Director of Legal Resources, Law Society of Saskatchewan): Understanding Information Literacy – And Convincing a New Generation of Lawyers They Might Need Legal Research Training
- Beth Bilson (Professor, U of S College of Law): Historical Legal Research and Using the Archives
- Ann Marie Melvie (Librarian, Court of Appeal for Saskatchewan), Joanne Colledge (Associate, MacPherson Leslie & Tyerman): New Courts of Saskatchewan Citation Guide
- Marilyn Lustig-McEwen (Queen’s Printer, Government of Saskatchewan): The Challenges of Legislative Publishing
- Alan Kilpatrick (Librarian, Law Society of Saskatchewan Library): Navigating the Members’ Section – Exploring Online Research
Please see the upcoming CBA Section Handbook for more information. Registration for the 2014-2015 section year will begin August 1, 2014.