All About Estates

Another reminder about beneficiary designations – Simard v Hall

Today’s blog has been written by Yvonne Mazurak, associate at Fasken LLP

I’ll admit it–I love watching holiday movies. And the more predictable, the better. I recently watched one that hit many of the expected tropes: the main character returns to their hometown from the “big city” to reconnect with an aging parent, who they have been estranged from since the death of their other parent (and–of course–in the process also reconnects with an old childhood friend/soon-to-be romantic partner).

The plot (save for the romantic bit) reminded me of the decision by the BC Supreme Court, Simard v Hall, 2021 BCSC 1836, released on September 29, 2021. The case involves the estate of Verna Simard who, after the death of her husband, had become estranged from all of her adult children, but one—her daughter, Julie—with whom she remained close.

At issue in the decision was whether certain assets Julie received from Verna, before and after Verna’s death, were held on resulting trust for Verna’s estate, including a number of registered accounts of which Julie was designated as beneficiary. Verna’s Will (which, for context, had been executed after having become estranged from her three other children) provided that the residue of her estate was to be divided equally among her four children.

In reaching a decision about the registered accounts, Justice Fleming applied the principle established by the Supreme Court of Canada in Pecore v Pecore, that there is a rebuttable presumption of a resulting trust where a parent makes a gratuitous transfer of assets to an adult child. For registered accounts held at one institution, Justice Fleming decided that, based on the evidence (including the beneficiary designation in the institution’s application form), Verna intended Julie to receive the balance of such accounts on her death. Justice Fleming found the designation on the form to be “detailed enough to provide further evidence that Verna intended Julie to receive the balance” on her death and consistent with the intention she expressed in meetings with her investment advisor (as documented in the investment advisor’s notes). On the other hand, for registered accounts held at other institutions, Justice Fleming found that Julie did not establish on a balance of probabilities that Verna had the same intention. For these accounts, the only evidence provided was account statements which identified Julie as the beneficiary.

The Pecore principle was first applied in the context of beneficiary designations in the 2020 Ontario Superior Court of Justice decision, Calmuksy v Calmusky, (which my colleague Demetre Vasilounis wrote an excellent post about on this blog). In that case, because the son that the deceased had named as beneficiary of a RRIF had not provided sufficient evidence to successfully rebut the presumption, the account fell into the estate. The novel application of Pecore came as a surprise to estate planning lawyers and financial institutions, and then more recently, in Mak (Estate) v Mak (which Tyler Lin has written about on this blog), the Ontario Superior Court declined to apply the Pecore principle in its analysis regarding a RRIF for which a beneficiary designation was in place.

With Calmusky and Mak as conflicting decisions, the question of whether the presumption of resulting trust applies in this context remains unresolved in Ontario. In light of such uncertainty, and now the Simard decision, clients would be well advised to document any intention to gift assets by way of beneficiary designations. This is particularly important where such gifts are to adult children and/or where they do not correspond with the residue provisions set out in the client’s Will.

Thanks for reading and happy holidays!

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