On March 16, 2020, the Superior Court of Ontario released its decision in Calmusky v Calmusky. In Calmusky, the Court applied the presumption of resulting trust to a RIF that was designated to a particular beneficiary. The beneficiary was unable to rebut the presumption, and the Court ordered that funds from the RIF were to be paid to the estate. For a more detailed discussion on Calmusky, see Demetre Vasilounis’ July 17, 2020 post on this blog.
Calmusky has not been appealed, or relied upon, and a legislative pronouncement will be needed to restore clarity in a timely manner.
The Ontario Bar Association (OBA) has delivered a submission to the Attorney General of Ontario and Minister of Finance, proposing Amendments to the SLRA and the Insurance Act. The OBA lists the potential effects of Calmusky, including: (i) increased in litigation where designated beneficiaries are not the same as the estate’s beneficiaries, (ii) uncertainty in contracts that use beneficiary designations as a way to secure support payments (such as separation, cohabitation or divorce settlement agreements which often use life insurance proceeds as security for support obligations on death), and (iii) defeated testamentary intentions where beneficiary designations have been made and can no longer be changed.
The OBA has proposed the following legislative amendment to the SLRA:
“51(3) When a designation is made under a plan, there is no presumption of resulting trust in favour of the participant’s estate of the benefit payable under the plan on the participant’s death.”
In addition, the OBA has proposed the following amendment to the Insurance Act:
“190(3.1) When a designation is made by contract or declaration under subsection 190(1) there is no presumption of resulting trust in favour of the insured’s estate of the insurance money payable under the contract.”
If implemented, the OBA’s proposed amendments would make it clear that a presumption of resulting trust would not be applied to benefits designated under a plan or insurance contract. It would remain possible that, in a rare case, a designated beneficiary could hold a benefit in a resulting trust for the estate. In any such case, however, the burden would be firmly on the estate to put forward evidence of the deceased’s intentions and prove the existence of a resulting trust.