When you are doing Estate planning, most individuals want as little as possible to go through their Will. They want to minimize their Estate in order to save on Estate Administration Tax (probate tax).

Imagine – you are considering drafting a new valid Will. You have already done one previously and ensured that your investments have a designated beneficiary – which allows these funds to go to the beneficiary outside the Will, and avoid tax.

You have existing RRIF and TFSA accounts and have made all necessary provisions to ensure your beneficiaries will receive these funds upon your death.

You’ve decided to make a new Will. In drafting the new Will, you consider that you have already designated funds to two of your children (with your RRIF and TFSA). As such, you decide that you will leave money in your Will, but only to your other two children.

As with most Wills, the Will contains the clause: “I HEREBY REVOKE all Wills and Testamentary dispositions of every nature and kind whatsoever made by me heretofore made”.

Does this clause act to remove the designations you did previously (as you intended) or does making a new Will revoke the designations and therefore result in two of your children not inheriting at all?

As with most situations, the Testator/Testatrix is not available to give their intentions and it is left to the court to decide.

Recently, in Alger v. Crumb[1], the court addressed the issue of whether this general revocation clause makes a Will not effective under s. 52(1) of the SLRA (Succession Law Reform Act) to revoke those designations. In analyzing this decision, the court reviewed these sections of the SLRA.

Sections 51 and 52 of the SLRA governs designations and revocations under a Will on the death of the Testator/Testatrix. Section 53 deals with the payment of the benefit under the plan to the designated beneficiary and enforcement.

Section 51 of the SLRA sets out the approach to designations in Ontario. Under s. 51(1), a person is able to designate a beneficiary of a benefit payable under a plan on the person’s death through two mechanisms: (a) a signed instrument, or (b) by Will.

Where a party elects to designate a beneficiary by Will, the designation is only effective “if it relates expressly to a plan, either generally or specifically”[2]. A later designation will revoke an earlier designation where there is inconsistency.[3]

In Alger[4], the court set out a test to determine the meaning behind this standard clause. The Court determined that, the first question in interpreting the clause is whether the term “testamentary dispositions” includes the designations of beneficiaries by instrument of the RRIF and TFSA plans. In MacInnes v. MacInnes,[5] the Supreme Court held that the designation of a beneficiary under an employee benefit plan to receive the proceeds of the plan on death is a testamentary disposition, the test being whether the intent of the maker was that the gift be dependent on the maker’s death. That case has been interpreted and relied on subsequently to apply to an RRSP beneficiary designation[6].

In the case of Alger[7], the judge concluded that this first question is answered in the affirmative, the RRIF and TFSA plans are testamentary dispositions and therefore are included within the meaning of that term as used in the general revocation clause of the will.

The remaining question is whether the revocation of “all…Testamentary dispositions of every nature and kind whatsoever” relates “expressly to the designation, either generally or specifically.” This statutory requirement has two components for the revocation to be effective: 1) it must relate to the designation, as opposed to the plan; and 2) it must relate to the designation “expressly…, either generally or specifically”.

In Alger[8], the judge concluded that this clause, which is provided in a lot of Wills, does not relate to designations “expressly”. In other words, if a general revocation clause commonly used within a Will does not relate expressly to the beneficiary designations made by the testator/testatrix, for example for her RRIF and TFSA plans, it does not comply with s. 52(1) of the SLRA, and it is therefore not effective to revoke the designations of beneficiaries of the RRIF and TFSA plans.

This decision assists people when drafting Wills and understanding that interpretation is sometimes left to a judge. Rest assured, named designated beneficiaries remain unless a new Will “expressly” excludes them.

Contact the Estate Litigation Lawyers at Derfel Estate Law in Toronto for Guidance on Wills

At Derfel Estate Law, our estate litigation lawyers have substantial experience helping clients manage probate and estate administration in Ontario. Often, executors do not have a complete picture of a testator’s debts until after their passing. Dealing with an estate that has significant debts can be confusing and frustrating. If you are an executor of an insolvent estate, contact our lawyers at 416-847-3850 or reach out to us online to find out how we can help

Blog by articling student Kathleen Judd, BSc. (Hons), JD

[1] Alger v. Crumb, 2023 ONCA 209 (CanLII)

[2] Succession Law Reform Act, at s. 51(2)

[3] Ibid, at s. 52(2).

[4] Supra, note 1

[5] MacInnes v. MacInnes, 1934 CanLII 16 (SCC), [1935] SCR 200, at para. 14

[6] see Amherst Crane Rentals Ltd. v. Perring (2001), 241 D.L.R. (4th) 176 (Ont. C.A.), 2004 CanLII 18104, leave to appeal to S.C.C. refused, [2004] S.C.C.A. No. 430

[7] Supra, note 1

[8] Ibid