Background

The parties in this case were married in 1993 and separated in 1998. Prior to separation, in 1997, the husband designated his wife as the sole beneficiary of his Locked in Retirement Account (“LIRA”). In 1998 when the parties separated, the LIRA had a total value of about $67,000.00 and came from a federally regulated pension plan.

The parties signed a Separation Agreement in 2005 which required the husband to pay to the wife $100,000 as a final settlement for all issues stemming from the breakdown of their marriage. In 2001, the husband designated his parents as the sole beneficiaries of his LIRA. However, due to a mistake, the bank’s records continued to show that his ex-wife was the sole beneficiary. In 2007 and 2015, the bank contacted the husband and asked him to update the beneficiary designation but the husband never did so. Despite not updating the beneficiary designation, during a call with the bank in 2015, the husband made it clear that he did not wish for his ex-wife to be the beneficiary.

The husband passed away in 2018 and since the ex-wife was still listed as the sole beneficiary, the husband’s executor contacted her to release any rights she might have in the LIRA which had by this point gone up to $166,000 in value. The wife took the position that the husband did not formally revoke the 1997 designation which made her the sole beneficiary and as such, she was entitled to those funds. The husband’s estate on the other hand argued that the 1997 designation was revoked when he signed the 2001 designation making his parents the beneficiaries. The estate also took the position that by virtue of the Separation Agreement, the wife released any claim that she may have to the proceeds of the LIFE.

Analysis

Justice Gilmore provided a helpful explanation as to what a LIRA is in this case. The court then went on to clarify that the rules for dealing with beneficiary designations for federal regulated pensions are governed by the Succession Law Reform Act in Ontario.

Section 51(1) of the Succession Law Reform Act states that “[a} participate may designate a person to receive a benefit payable under a plan on the participant’s death, (a) by an instrument signed by him or her on his or her behalf by another person in his or her presence and by his or her direction; or (b) by will, and may revoke the designation by either of those methods.

The court also relied on section 53 of the Succession Law Reform Act which states “[w]here a participate in a plan has designated a person to receive a benefit under the plan on the death of the participant, (a) the person administering the plan is discharged on paying the benefit to the person designated under the latest designation made in accordance with the terms of the plan, in the absence of actual notice of a subsequent designation or revocation made under section 51 but not in accordance with the terms of the plan”.

Relying on the above, Justice Gilmore determined that the husband’s 2001 designation was an “instrument” as outlined in section 51(1) and that s. 53 does not require an instrument to be registered for it to be binding and it did not matter that the parties could not find the original copy of the 2001 designation. The court found that the 2001 designation was the latest beneficiary designation. The court went on to comment that the releases in the parties Separation Agreement were clear and broad enough to eliminate the wife’s claim to the proceeds of the LIRA.

The court went on to say that even if the 1997 designation had not been revoked by virtue of the 2001 designation, the wife would have been unjustly enriched if she were to receive the funds from the LIRA because all of the parties’ assets (including the husband’s LIRA) were already taken into consideration by virtue of their Separation agreement.

Conclusion

Justice Gilmore ordered that the husband’s parents were entitled to receive the funds from his LIRA by virtue of the 2001 designation.

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