All About Estates

A Presumptive Peril: The Law of Beneficiary Designations is Now in Flux

Calmusky v. Calmusky, 2020 ONSC 1506, is a 2020 decision of the Ontario Superior Court of Justice that is ruffling some feathers among banks, financial advisors and estate planning lawyers in Ontario. In this case, the court applied the principles surrounding the presumption of resulting trust, established by the Supreme Court of Canada in Pecore v. Pecore, [2007] 1 S.C.R. 795, to two different issues related to a single estate. One application was entirely in line with previous decisions, while the other is much more controversial and is the subject is the subject of our discussion today.

First it is important to understand what the Pecore principle at play here is. Pecore established that where there is a gratuitous transfer (i.e. a transfer for no consideration) of assets from a parent to an adult child, there is a presumption of resulting trust, that is, a presumption that the transferee holds the assets as trustee for the transferor (usually for the benefit of that transferor or that transferor’s estate). Prior to Pecore, in such transfers between parents and adult children, a presumption of advancement used to apply; in other words, that a parent, in making such a transfer, was merely “advancing” to their adult child what their adult child was going to get anyway upon their death, and therefore not creating any trust relationship. However, the Supreme Court of Canada in Pecore ruled that this was an outdated manner of thinking with respect to adult children, and thus that the presumption of advancement is no longer applicable to them (but note that it is still applicable to minor children). Instead, it is the presumption of resulting trust that applies with respect to adult children, and courts often apply this presumption in situations where a party is alleging that the adult child of a deceased parent is holding property that said child owned jointly with said parent in trust for said parent’s estate (rather than as beneficial owner).

Such is the case in Calmusky, at least on the surface. Initially, the court applied the Pecore principle to an issue surrounding the joint ownership of a bank account between Gary Calmusky, and his deceased father Henry. Henry had gone to the bank with Gary to arrange to become joint account owners of his then-solely-owned accounts a few years prior to his death. When Henry died, Gary’s twin brother Randy claimed that the accounts should be distributed through the estate, and not passed on to Gary alone. Contrastingly, Gary argued that he is the sole beneficial owner of the accounts, as Henry had intended to give Gary survivorship rights to the accounts.

Under Pecore, in order to be successful, Gary had to show on a balance of probabilities that Henry intended to gift the remainder of the accounts to him upon his death. In the absence of such evidence, Gary would have been (and in fact, was) found as holding the remainder of the accounts in trust for Henry’s estate. Note that the facts in Calmusky were somewhat complicated; Randy had a failed business in which Gary and his late mother (Henry’s wife) invested and eventually lost money, and there was an argument that Henry sought to “remedy” that. Henry also had a will which the parties did not dispute, but the will made no mention of Henry’s joint ownership of his accounts with Gary (or his RIF, which is discussed below).

That being said, to support his argument, Gary did have documents from the bank that indicated that Gary had “survivorship” rights to the joint accounts, as well as testimony from bank employees who were present when Henry had made the joint account arrangements. Ultimately, however, the court was not satisfied with the evidence that Gary had presented, and found that he did not rebut the presumption of resulting trust. The court felt that the bank documents were not specific enough in showing that Henry actually intended a gift, and that the testimony from the employees was not enough to demonstrate that Henry understood that Gary was to receive beneficial ownership of the joint accounts.

The problem with Calmusky, however, is that the court applied the above analysis not only to Henry’s joint accounts, but also to an RIF of which Henry designated Gary as a beneficiary. The court actually applied the presumption of resulting trust from Pecore to the RIF, and found that Gary also did not rebut this presumption. This represents a relatively novel application of Pecore, and one in which has garnered concern from financial and legal professionals in this area.

A primary reason for this concern is that an RIF is an asset where its beneficiary (or beneficiaries), upon the RIF owner’s death, can be designated separately and explicitly (and such designation specifically operates outside of the owner’s estate for tax purposes). There is usually no need to determine “intent” behind this designation, as this kind of beneficiary designation is supported by legislation, including in Part III of the Succession Law Reform Act (the “SLRA”). Subsection 51(1) of the SLRA states that an individual may designate a beneficiary of a “plan” (including an RIF, pursuant to subsection 54.1(1) of the SLRA) either through “an instrument signed by him or her or signed on his or her behalf by another person in his or her presence and by his or her direction” or in his or her will. Section 53 of the SLRA mandates that an institution administering the “plan” must pay it out in accordance with a subsection 51(1) beneficiary designation upon the plan-owner’s death.

In Calmusky, it is clear that the Henry signed an “instrument” designating Gary as the beneficiary of the RIF, yet the court makes no reference to the SLRA in applying the Pecore principles to RIFs. Instead, in arriving to its application of the Pecore principles to RIFs, the court cited two cases: the 2009 Ontario Superior Court of Justice decision in McConomy-Wood v. McConomy, 46 E.T.R. (3d) 259, and the Manitoba Court of Appeal decision Dreger (Litigation guardian of) v. Dreger (1994), Man. R. (2d) 39 (notably decided before Pecore).

Very briefly, in McConomy-Wood, the court found that an adult child of a deceased parent, although designated as a beneficiary of the parent’s RIF, held the RIF in trust for the parent’s estate, as the residual beneficiaries of the estate were the child and their two siblings and there was “abundant” evidence that the deceased intended to treat her children “equally”.[1] The court did not apply the Pecore principles because of this “abundant” evidence, however it did say that if it had to do so, it would have applied Pecore and thus would have found the presumption of resulting trust as applicable to the RIF. The court in Calmusky cited this obiter in arriving to its conclusion.

Now, one might argue that the SLRA and the principles in McConomy-Wood and Calmusky are not necessarily incompatible with one another. One could interpret the cases to mean that while beneficiary designations for RIFs may be made pursuant to subsection 51(1) of the SLRA, and while financial institutions administering RIFs must pay out such RIFs pursuant to such designations under section 53 of the SLRA, there is nothing in the SLRA precluding a court from finding that such designations and such payments were made or are to be made, respectively, in trust. The difference between the cases is that in McConomy-Wood, the court found that there was “overwhelming” evidence suggesting a trust obligation, and there was no need to find a rebuttable presumption of resulting trust. Yet, in Calmusky, while there was no evidence positively confirming a trust obligation, the court took the analysis a step further and did, in fact, find that a presumption of resulting trust existed (and that Gary did not have evidence to rebut the presumption).

Similarly to McConomy-Wood, in Dreger (although not binding on the Ontario Superior Court of Justice as it is a Manitoba decision), the Mantioba Court of Appeal found evidence that a mother’s naming of her adult child as the beneficiary of her RRSP annuity contracts and life insurance policies did so intending for the child to hold those assets in trust for her estate, and that there was sufficient evidence to demonstrate that. As the case was pre-Pecore, the law at the time was the presumption of advancement, and the evidence rebutted that presumption. Note that Part III of the SLRA which applies to RIFs, also applies to RRSPs. The Ontario Insurance Act also allows for similar designations with respect to life insurance. Thus, it seems that the court in Calmusky referred to Dreger to demonstrate that resulting trust principles can apply to these similar types  of assets.

Ultimately, the court readily accepted the presumption of a resulting trust as applicable to Henry’s RIF beneficiary designation, and did not differentiate between joint accounts and RIFs. In fact, in the court’s words, there is “no principled basis for applying the presumption of resulting trust to the gratuitous transfer of bank accounts into joint names but not applying the same presumption to the RIF beneficiary designation”.[2]

At the outset, however, it seems that there are several principled bases for differentiating between the two. Primarily, can one really say that a parent adding an adult child as an owner of his or her bank account, while alive, is really the same type of “gratuitous transfer” as an RIF beneficiary designation? In the former, the ownership is shared while the parent is alive (and there may be reasons for doing this, such as assistance with day-to-day financial affairs for aging or ailing parents), but in the latter, the ownership of the RIF only transfers upon death. By the court’s logic in Calmusky, one might assume that every transfer of a parent’s property to their adult child upon the parent’s death is a gratuitous transfer to which the Pecore principles apply.

That is, unless, the court is suggesting that it is only property transferred outside of a will that is subject to a presumption of resulting trust, in which case the law as we understand it with respect to beneficiary designations would totally be in flux, potentially rendering hundreds of thousands of beneficiary designations for RIFs, RRSPs, and TFSAs with banks, as well as life insurance policy designations with financial institutions or even employers, as ineffective. This is particularly in light of the fact that the court in Calmusky seemed unsatisfied with the “half-page” RIF beneficiary form that Henry had signed.

It is also important to note that the presumption of resulting trust with respect to adult children evolved from the formerly-recognized presumption of advancement, a sometimes-erroneous assumption that a parent who arranges for joint ownership of an asset with their adult child is merely “advancing” the asset to such adult child as such adult child will eventually be entitled to such asset upon such parent’s death. While this presumption may very well be erroneous to many jointly-owned assets, the whole point of a beneficiary designation is to specifically dictate what is to happen to an asset upon death. From a practical perspective, it seems uncontroversial that a regular person who is not well-versed in the law in this area would assume that, when they go to fill out forms with their bank or their employer, naming a beneficiary pursuant to an asset’s “beneficiary designation” form would mean providing an outright distribution of that asset to that beneficiary, and not in trust to that beneficiary on behalf of their estate. In the same vein, the court in Calmusky also doesn’t address the possibility that one can designate their estate itself as beneficiary of an RIF (or RRSP or life insurance policy), whereas a deceased person’s traditional bank account is usually captured by their will’s residue provisions (unless it is specifically dealt with otherwise). As that possibility exists, why would a parent use such a beneficiary designation to name their child as trustee for their estate, when designating the estate itself would achieve the same effect in a clearer manner? Thus, it would be heavily problematic to render ineffective the existing principles surrounding beneficiary designations.

All of the above being said, people make beneficiary designations all the time, and it’s probably true that not all beneficiary designation forms are robust enough to explain the law in this area (even pre-Calmusky). Does this mean a person always needs to consult with a lawyer when making a beneficiary designation? The result in Calmusky would seem to lead to such a cumbersome outcome. Again, arrangements for joint ownership of assets, on one hand, and beneficiary designations, on the other, seem like such fundamentally different (and differently-understood) gratuitous transfers of property that it feels rather unnecessary for the court in Calmusky to have applied the presumption of resulting trusts to the latter.

In conclusion, it will be interesting to see if a future court decision addresses these issues. Without an in-depth analysis of the considerations described above, or even how the presumption of resulting trust interacts with the relevant sections of the SLRA, the decision in Calmusky leaves a great deal of uncertainty, and both lawyers and financial professionals alike will have to be wary of this case when advising their clients with respect to assets that can be designated pursuant to formal beneficiary designations.

Thank you for reading, and thank you to Emily Papsin, Student-at-Law at Fasken, for helping me write this post.

[1] McConomy-Wood at paras 55-58.

[2] Calmusky at para 56.

About Demetre Vasilounis
Demetre is an associate in the Private Client Services group of Fasken’s Toronto office. He has a broad trusts and estates practice and has developed and implemented cohesive succession plans for clients involving a wide range of different family and corporate structures. He has also advised on a breadth of family wealth planning matters, including tax issues, estate freezes, cross-border and international estates, probate planning, disability planning, charitable gifting, asset protection strategies, personal privacy, intellectual property and domestic contracts. Demetre regularly speaks and writes about various legal issues in succession planning, including in particular the evolving area of digital assets in estate planning. His work has been cited by the Ontario Superior Court of Justice and he has spoken at both national and international events. Demetre has obtained the prestigious Trust and Estate Practitioner (TEP) designation from the Society of Trusts and Estates Practitioners (STEP). While Demetre assists many families with navigating these areas, he is also experienced in helping individual entrepreneurs and business owners, philanthropists, athletes, artists, authors, entertainers, social media influencers and various types of professionals.


  1. Kathleen Howes

    July 17, 2020 - 2:37 pm

    thank you for alerting us to this alarming case, which hopefully will be appealed.

  2. Carol Willes

    July 17, 2020 - 5:02 pm

    As an estate planer at a financial institution this is certainly a concerning case and one I will watch with interest.

  3. daniel blazina

    July 17, 2020 - 5:06 pm

    in trust to that beneficiary on behalf of their estate – could this mean a creditor could attack a preferred beneficiary designation on an insurance policy and claim the money forms part of the estate – and a step further could insurance with a beneficiary be included for probate fees

    • Demetre Vasilounis

      July 18, 2020 - 12:30 am

      Daniel, in theory, based on the reasoning in the decision, I would say yes. Note that the court in this decision did not specifically apply the presumption of resulting trust to insurance policies, but the court’s favourable citation of Dreger suggests that it would have done so if the facts also involved an insurance policy.

  4. David

    July 17, 2020 - 8:04 pm

    Based on all of what you have written, would it be wise for the person designating the RIF asset to include wording in their will indicating their wishes? Would that be enough to satisfy all parties?

    • Demetre Vasilounis

      July 18, 2020 - 12:32 am

      David, in light of this decision, I would say the more documentation/wording one has to confirm the testator’s intent, the better. The court in this decision seems to be specifically focusing on beneficiary designations outside of wills, but considering that such designations can also be made within wills, it would be a best practice, in light of this decision, to ensure that the beneficiary designation includes language indicating that the designation is not to be made in trust and is for the benefit of the beneficiary.

  5. Sanjana Bhatia

    August 19, 2020 - 9:58 pm

    Hi there,

    Has this case been appealed?


    • Demetre Vasilounis

      September 17, 2020 - 8:43 pm

      Hi Sanjana, I have recently learned that this case will not be appealed.

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