COURT OF APPEAL FOR ONTARIO
LASKIN, GOUDGE and FELDMAN JJ.A.
B E T W E E N:
AMHERST CRANE RENTALS LIMITED
Angela Assuras for the appellant
Applicant
(Appellant)
- and -
Mark Muir Rodenburg
for the respondent
ARLENE CLARE PERRING, personally and as trustee of the estate of Ashley Perring, deceased
Respondent (Respondent)
Heard: October 3, 2003
On appeal from the judgment of Justice Donald R. Cameron dated July 7, 2002 and the costs award dated September 19, 2002.
1This case raises for the first time in this court, the issue of the proper treatment of RRSP proceeds following the death of the owner of the RRSP. Simply stated, the issue is whether: (a) following the death of the owner of an RRSP, the proceeds of the RRSP devolve directly to the designated beneficiary or form part of the estate of the deceased owner; and (b) even if they do not form part of the estate, whether creditors of the estate who remain unpaid have any claim against the proceeds of the RRSP in the hands of the designated beneficiary. This issue has caused a divergence of judicial opinion both within Ontario and in other provinces.
2The facts of the case are quite typical. The appellant is a creditor of the deceased. The respondent is the widow of the deceased and the designated beneficiary of two RRSP funds. She received the proceeds of the two funds from the two plan administrators. Because the estate of the deceased was unable to pay all of its debts and declared bankruptcy, the creditor sought to obtain payment of the outstanding debt owed by the estate from the beneficiary out of the proceeds of the RRSPs.
3The application judge denied the creditor any recovery. He held that RRSPs do not form part of the estate of the deceased but instead devolve directly to the designated beneficiary. He held further, and contrary to the position taken by the Manitoba Court of Appeal in Clark Estate v. Clark (1997), 115 Man. R. (2d) 48 (C.A.), that the creditor had no right to seek repayment of the debt from the proceeds of the RRSPs in the hands of the designated beneficiary when the estate was unable to pay its debts.
4I agree with the conclusion reached by the application judge. For the reasons that follow, I would dismiss the appeal.
FACTS
5Ashley James Perring died April 30, 1998. He made a will in 1994 naming his wife, the respondent, the executrix and sole beneficiary of his estate. He also designated the respondent as the beneficiary of two RRSPs, both in the will and in separate designations filed with the administrators of the RRSPs, one with Canada Trust Company and the other with the Royal Bank of Canada. The respondent received the proceeds of the RRSPs ($117,000) in May 1998. The estate filed an assignment in bankruptcy in April 1999, following which, the trustee in bankruptcy demanded that the respondent pay the proceeds of the RRSPs to the estate. She refused and proceeded to collapse the RRSPs, pay the withholding tax and retain the balance of $82,000. The respondent was also the beneficiary of her husband’s three life insurance policies and upon his death received the proceeds in the amount of approximately $1.27 million.
6The appellant is a creditor of the bankrupt estate. The debt of $53,679.28 was owed by the deceased as a director of a contractor corporation for breach of trust under s. 13 of the Construction Lien Act, R.S.O. 1990, c. C. 30. The appellant filed a proof of claim in the bankruptcy but remains unpaid. The appellant obtained an assignment of the claim of the trustee against the respondent under s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B. 3 in respect of the RRSP proceeds, and brought the application in this matter on its own behalf.
7Cameron J. held that the RRSP proceeds do not form part of the deceased’s estate and therefore of the bankrupt estate. He also addressed the secondary question whether the creditor could seek payment of its debt directly from the beneficiary of the RRSPs in accordance with the decision of the Manitoba Court of Appeal in Clark. Cameron J. declined to follow Clark on this second issue, and held that there is no basis for a creditor to claim any interest in proceeds that do not form part of the estate of the debtor. He therefore dismissed the application. He awarded the respondent costs of the application that he fixed in the amount of $30,000. The appellant seeks leave to appeal the amount of the costs award regardless of the outcome of the appeal on the merits.
ISSUES
(1) Do the proceeds of an RRSP devolve directly to the designated beneficiary, or do they form part of the deceased’s estate?
(2) If the RRSP devolves to the beneficiary, do the unpaid creditors of the estate have a claim against the RRSP proceeds in the hands of the beneficiary?
(3) Should this court reduce the amount of costs ordered by the application judge?
Issue 1: Do the proceeds of an RRSP form part of the deceased’s estate?
8The appellant submits that the application judge erred by not holding that the proceeds of an RRSP devolve to the designated beneficiary through the estate. The appellant relies on s. 2(1) of the Estates Administration Act, R.S.O. 1990, c. E. 22 together with the proposition that at law, the designation of a beneficiary of a fund is a testamentary disposition and therefore the fund devolves to the estate and is subject to the claims of creditors before it can be paid out to a designated beneficiary: see A.H. Oosterhoff, Oosterhoff on Wills and Succession, 5th ed. (Toronto: Carswell, 2001) at 499; James MacKenzie, Feeney’s Canadian Law of Wills, 4th ed. (Markham: Butterworths, 2000) at 1.4 (para. 1.8). The appellant completes the argument by pointing to legislation in two provinces, British Columbia and Prince Edward Island, which specifically excludes the proceeds of an RRSP from an estate and, in the case of Prince Edward Island, from the claims of the estate’s creditors, and to s. 196(1) of the Ontario Insurance Act, R.S.O. 1990, c. I. 8,1 which specifically excludes insurance proceeds from the estate of the insured and from the reach of creditors of the insured. The appellant says that there is no comparable legislation for RRSP proceeds.
9Section 2(1) of the Estates Administration Act provides:
2(1) All real and personal property that is vested in a person without a right in any other person to take by survivorship, on the person’s death, whether testate or intestate and despite any testamentary disposition, devolves to and becomes vested in his or her personal representative…as trustee for the persons by law beneficially entitled thereto, and, subject to the payment of the persons’ debts and so far as such property is not disposed of by deed, will, contract or other effectual disposition, it shall be administered, dealt with and distributed as if it were personal property not so disposed of.
10In Canadian Imperial Bank of Commerce v. Besharah (1989), 68 O.R. (2d) 443 (H.C.J.), the first case to address the issue of how an RRSP devolves to a designated beneficiary, the trial judge reasoned that: (a) the RRSP was vested in the deceased during his life and the designated beneficiary had no vested interest in it until his death;(b) under s. 2(1) of the Estates Administration Act, the deceased’s vested RRSP devolved to his personal representative; (c) counsel could not refer the court to any statutory exemption from the general rule, applicable to RRSPs, comparable to the section of the Insurance Act, R.S.O. 1980, c. 218, s. 173(1) (now R.S.O. 1990, c. I. 8, s. 196) which provides that proceeds of a life insurance policy devolve directly to the designated beneficiary, not to the estate and are not subject to the claims of creditors of the estate; and (d) the RRSP therefore devolved to the deceased’s estate to be paid out to the designated beneficiary after the creditors of the estate were satisfied.
11Unfortunately, counsel in the Besharah case did not refer the trial judge to s. 53 of the Succession Law Reform Act, R.S.O. 1990, c. S. 26, Part III, entitled “Designation of Beneficiaries of Interest in Funds or Plans”, which provides:
- Where a participant 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…; and
(b) the person designated may enforce payment of the benefit payable to him under the plan but the person administering the plan may set up any defence that he could have set up against the participant or his or her personal representative.
12Cameron J. read this section as excluding the personal representative of the deceased owner of the RRSPs from any right to enforce payment of the proceeds of a fund where there is a designated beneficiary, and as an exception for RRSPs (and other such funds) from s. 2(1) of the Estates Administration Act.
13This conclusion is fully in accord with the analysis of the majority of the Supreme Court of Canada in the 1957 case of Kerslake v. Gray, [1957] S.C.R. 516. In that case, the issue was whether a life insurance policy made payable by a declaration by the deceased under the Insurance Act, R.S.O. 1950, c. 183, to an ordinary beneficiary, formed part of the estate of the deceased. Section 164 of the Insurance Act specifically provided that insurance monies payable to a preferred beneficiary were held in trust for the preferred beneficiary, were not subject to the control of the insured or his creditors and did not form part of the insured’s estate. Section 161, which dealt with ordinary beneficiaries, did not so provide. Section 161(2) was in virtually the same terms as the current s. 53 of the Succession Law Reform Act. Section 161(1) permitted the insured to designate a beneficiary by contract or declaration and subsequently change the beneficiary; s.161(2) enabled the beneficiary to enforce the contract at its maturity for the beneficiary’s own benefit and provided that the insurer could set up against the beneficiary any defence it had against the insured, and that payment made to the beneficiary discharged the insurer.
14The Supreme Court held that s. 161 operated with respect to ordinary beneficiaries in the same way that s. 164 operated in respect of preferred beneficiaries, and that the personal representatives of the deceased insured had no claim to monies that were payable under an insurance policy to an ordinary beneficiary. Those monies did not form part of the estate.
15Importantly, although s. 161 did not contain explicit words, such as those found in s. 164, protecting the proceeds of the insurance policy for the benefit of ordinary beneficiaries both from inclusion in the deceased’s estate and from creditors of the insured, the court held that the effect of the two sections was the same.
16The Manitoba Court of Appeal in Clark, supra, interpreted a provision in the Manitoba legislation which dealt with RRSP proceeds and was worded similarly to s. 161 of the Insurance Act (as it was worded in Kerslake) and to s. 53 of the Ontario Succession Law Reform Act, to have the same meaning and effect as those sections. The Retirement Plan Beneficiaries Act, C.C.S.M. c. R. 138 was amended following the Manitoba Court of Appeal decision in Pozniak Estate v. Pozniak (1993), 88 Man. R. (2d) 36 (C.A.). In that case, the Court had followed the Ontario court in the Besharah case, holding that the proceeds of an RRSP fund formed part of the gross value of the estate and were available to pay the debts of the estate. Sections 14 and 15 of the amended Act read:
A person to whom a benefit is payable under a plan pursuant to a designation may enforce payment of the benefit against the administrator of the plan, but the administrator may set up any defence against the person that it could have set up against the participant who made the designation.
Payment by the administrator of a plan of the benefits under the plan in accordance with a designation is, in the absence of actual notice of a subsequent designation or a subsequent revocation of the designation, a full discharge to the administrator of its obligations under the designation.
17Based on the combination of the two new sections, and particularly on the wording of s. 15, which is virtually identical to s. 53(a) of the Succession Law Reform Act, the court in Clark held that the new sections were added to modify the decision in Pozniak, and to allow the court to find that the RRSP fund passed directly to the designated beneficiary and did not form part of the deceased’s estate.
18In my view, the decision of the Supreme Court in Kerslake, which has not been overruled or disapproved since it was decided, compels the interpretation given by Cameron J. and by the Manitoba Court of Appeal in Clark. It appears very clear that neither that case nor s. 53 of the Succession Law Reform Act was brought to the attention of the trial judge in Besharah to assist the court in its analysis of the devolution of RRSP proceeds to a designated beneficiary.
19The appellant also relies on the Supreme Court of Canada decision in MacInnes v. MacInnes, [1935] S.C.R. 200, which held that a document made outside a will that designates a beneficiary to a profit sharing fund is a testamentary document. The appellant argues that an RRSP designation is such a document and because it is testamentary, the proceeds of the RRSP fall into the estate of the RRSP’s owner. The problem with this argument is that it does not take the appellant any further than did s. 2(1) of the Estates Administration Act, because s. 53 of the Succession Law Reform Act has been interpreted to constitute a statutory exemption to the general rule that would otherwise apply.
20Cameron J. found logical support for his conclusion that the legislature intended to except the proceeds of an RRSP that have been designated to a beneficiary from devolution to the estate, in s. 72(1) of the Succession Law Reform Act which provides:
- (1) Subject to section 71, for the purpose of this Part, the capital value of the following transactions effected by a deceased before his or her death, whether benefitting his or her dependant or any other person, shall be included as testamentary dispositions as of the date of the death of the deceased and shall be deemed to be part of his or her net estate for purposes of ascertaining the value of his or her estate, and being available to be charged for payment by an order under clause 63(2)(f),
(a) gifts mortis causa;
(b) money deposited, together with interest thereon, in an account in the name of the deceased in trust for another or others with any bank, savings office, credit union or trust corporation, and remaining on deposit at the date of the death of the deceased;
(c) money deposited, together with interest thereon, in an account in the name of the deceased and another person or persons and payable on death under the terms of the deposit or by operation of law to the survivor or survivors of those persons with any bank, savings office, credit union or trust corporation, and remaining on deposit at the date of the death of the deceased;
(d) any disposition of property made by a deceased whereby property is held at the date of his or her death by the deceased and another as joint tenants;
(e) any disposition of property made by the deceased in trust or otherwise, to the extent that the deceased at the date of his or her death retained, either alone or in conjunction with another person or persons by the express provisions of the disposing instrument, a power to revoke such disposition, or a power to consume, invoke or dispose of the principal thereof, but the provisions of this clause do not affect the right of any income beneficiary to the income accrued and undistributed at the date of the death of the deceased;
(f) any amount payable under a policy of insurance effected on the life of the deceased and owned by him or her;
(f.1) any amount payable on the death of the deceased under a policy of group insurance; and
(g) any amount payable under a designation of beneficiary under Part III.
21Section 72(1) lists a number of transactions by a deceased, the proceeds of which are deemed to be included as part of the deceased’s estate for the purpose of making and enforcing orders for dependants’ relief. Cameron J. reasoned that the existence of the section implies that the transactions listed in the section are not otherwise testamentary dispositions and their proceeds do not actually form part of a deceased’s estate. Subsection (g) of s. 72(1): “any amount payable under a designation of a beneficiary under Part III” includes RRSPs. Section 51(1) in Part III provides:
- (1) A participant 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 or signed 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.
And “Plan” is defined in s. 50 of Part III as follows:
“plan” means,
(a) a pension, retirement, welfare or profit-sharing fund, trust, scheme, contract or arrangement or a fund, trust, scheme, contract or arrangement for other benefits for employees, former employees, directors, former directors, agents or former agents of an employer or their dependants or beneficiaries,
(b) a fund, trust, scheme, contract or arrangement for the payment of a periodic sum for life or for a fixed or variable term, or
(c) a fund, trust, scheme, contract or arrangement of a class that is prescribed for the purposes of this Part by a regulation made under section 53.1
and includes a retirement savings plan, a retirement income fund and a home ownership savings plan as defined in the Income Tax Act (Canada) and an Ontario home ownership savings plan under the Ontario Home Ownership Savings Plan Act. ("regime") R.S.O. 1980, c. 488, s. 50; S.O. 1990, c. 9, s. 10; S.O. 1994, c. 27, s. 63(4), in force December 9, 1994 (R.A.). [Emphasis added.]
22Cameron J. concluded that if the proceeds of an RRSP were already part of the estate of a deceased, then s. 72(1)(g) would be meaningless. The appellant disputes this conclusion, arguing that the section is there to remove any doubt whether RRSP proceeds are included in the estate for the purpose of dependants’ relief. In my view, Cameron J. is correct. The legislature has specifically included RRSPs in the s. 50 definition of a “plan”, the benefit of which may be made payable to a designated beneficiary, and by virtue of s. 53, has excluded RRSPs from the estate of the owner. Section 72(1)(g) then includes RRSPs in the value of an estate for the specific purpose of dependants’ relief. In this statutory context, there is no basis to suggest that the legislature was in doubt about an issue over which it maintained legislative control.
23Cameron J. noted that the Ontario cases, Fekete Estate v. Simon (2000), 32 E.T.R. (2d) 202 (Ont. Sup. Ct.) and Banting v. Saunders Estate (2000), 34 E.T.R. (2d) 163 (Ont. Sup. Ct.), followed Clark on the issue of the devolution of RRSP proceeds, rather than Besharah. After reviewing the current state of the law, he agreed with the recent case law that “the proceeds of RRSPs vest in the designated beneficiary on the death of the owner of the RRSPs.”
24One issue that concerns some commentators about this interpretation of s. 53 of the Succession Law Reform Act is why the legislature did not use language similar to s. 196 of the Insurance Act, if its intent was to exempt RRSP proceeds from s. 2(1) of the Estates Administration Act and from devolving to the estate of a deceased planholder. The argument is that s. 53 is procedural only, but does not vest the proceeds of the RRSP plan in the beneficiary to the exclusion of the personal representative of the deceased or of the deceased’s creditors.2 One answer to this argument is that it is not necessary to compare and justify two sections that were enacted at different times and in different statutes. A second answer is that for all the reasons set out above, and following the interpretation given by the Supreme Court of Canada in Kerslake to language similar to s. 53, its effect is to vest the proceeds of an RRSP in the designated beneficiary to whom they are paid, without the specific language found in s. 196 of the Insurance Act.
Issue 2: Do creditors have a claim against the RRSP proceeds in the hands of the beneficiary?
25Cameron J. declined to follow the second part of the decision of the Manitoba Court of Appeal in Clark, that the proceeds of an RRSP in the hands of the designated beneficiary remain answerable for the debts of the deceased if there are insufficient funds in the estate to satisfy all of the creditors of the deceased. He found that there is neither a legal nor equitable basis for that conclusion.
26He began by observing that there is no authority other than Clark and the two Ontario cases that followed it, to support the conclusion reached by those courts on this issue. In summary, the analysis in the Clark case is: (1) there is no specific statutory exemption from creditors for RRSP proceeds; (2) unlike life insurance proceeds that never belonged to the deceased, RRSP proceeds did belong to the deceased before death and were answerable for the owner’s debts; (3) therefore, if the estate cannot pay the debts, the proceeds should be available in the hands of the beneficiary to respond to the claims of creditors, because creditors rank ahead of a volunteer: Re Diplock [1948] 1 Ch. 465 (C.A.); (4) sections 14 and 15 of the Retirement Plan Beneficiaries Act, the equivalent to s. 53 of the Succession Law Reform Act, is only a mechanism for the payment of the RRSP proceeds to the beneficiary and does not immunize those proceeds from the claims of creditors of the deceased.
27Cameron J. disputed these findings and legal conclusions both as a matter of logic and statutory interpretation and as a matter of policy, to the extent that policy considerations assist in the interpretation of the intent and effect of s. 53.
28First, dealing with the legal effect of the RRSP proceeds devolving to the designated beneficiary and not the estate, Cameron J. stated that once that happens, there is no security interest in the proceeds in favour of the creditors or other means by which the proceeds remain liable to the claims of creditors. He likened the effect in that respect to jointly held property: prior to death, the creditors of each joint owner can claim that owner’s share of the jointly held property, but upon the death of one owner, the whole property vests in the surviving joint owner and the creditors of the deceased have no further claim against it.
29Cameron J. next addressed the argument that insurance proceeds are different from RRSP proceeds because they never belonged to the insured and therefore could never be attached by the insured’s creditors, whereas the RRSP was liable during the life of the owner to the claims of creditors. The argument here is that very specific language is therefore needed to remove the creditors’ entitlement to RRSPs, whereas in the case of insurance proceeds, the creditors never had any claim to them during the life of the insured, so that nothing is being taken away. In response, Cameron J. pointed out first that contrary to this argument, some insurance policies have a cash surrender value that can be dealt with by an insured during his or her life and therefore potentially claimed by creditors during the life of the insured. Second, from a policy point of view, to the extent that both RRSPs and life insurance are used by people to provide security for their dependant spouses following their death, insurance paid for by premiums and RRSPs accumulated by tax-deferred savings over the years, are essentially equivalent vehicles. On that view, barring statutory language that would preclude such a result, both should be treated in the same way in the hands of a surviving beneficiary and not be subject to the claims of creditors of the deceased.
30Developing that theme further, Cameron J. weighed the claim of a spouse who has provided physical and emotional support to the other spouse during his or her lifetime against the claims of creditors of the deceased spouse, and rejected the conclusion that the equities necessarily favour the creditors. Put another way, a spouse beneficiary of an RRSP is not a mere volunteer in the commonly understood sense; rather, a spouse has given consideration or a quid pro quo during the lifetime of the other spouse, and in return, receives the RRSP proceeds for support after the death of the other spouse.
31Finally, Cameron J. observed that there is no need for a specific statutory exemption from creditors in order to immunize RRSP proceeds from the claims of creditors of the deceased, again comparing the RRSP to jointly held property that devolves to the other joint tenant free of claims of creditors of the deceased without any specific exemption. He held that the absence of a specific exemption from creditors is not enough to conclude that, by default, creditors have a claim on the RRSP proceeds in the hands of a designated beneficiary. The comparison to jointly held property in this context may be less relevant because on death, the property passes by right of survivorship and belongs solely to the surviving joint owner; consequently there is nothing left that belongs to the deceased from which to except the claims of creditors of the deceased. However, as discussed above, I agree with Cameron J. that the absence of words that specifically exempt RRSP proceeds designated to a beneficiary from creditors does not derogate from the effect of s. 53, which is to remove the proceeds of an RRSP that have been designated to a beneficiary from the estate of the owner of the RRSP, and to insulate those proceeds from the claims of creditors of the deceased’s estate.
32I also note the priority and procedural concerns for creditors suggested by Barry Corbin in “RRSPs: Partial Protection Against Creditors?” (2000) 20 E.T.P.J. 33 at 43-44, if the Clark analysis on the second issue is correct: (a) If there are two or more unsatisfied creditors, how do they attach the RRSP proceeds in the hands of the beneficiary and is there a mechanism for them to share those proceeds? (b) If there is more than one beneficiary, are they entitled to contribution and indemnity among themselves? (c) What is the priority between the estate creditors and creditors of the beneficiary, particularly if the beneficiary is bankrupt? Although these issues could be resolved on a case-by-case basis, their existence enhances the cogency of the argument that the legislature intended s. 53 to be a full exemption of RRSP proceeds from the estate of the deceased and from the claims of estate creditors. Otherwise, it would make more sense for the executor of the estate to have the obligation of collecting the RRSP proceeds and distributing them after creditors’ claims have been paid.3
33I agree with Cameron J. that there is neither a legal principle nor statutory authority that requires that the creditors have any claim on the proceeds of an RRSP that devolve directly to a designated beneficiary. I also agree that the equities do not necessarily favour the claims of creditors over those of beneficiaries of RRSP. The beneficiaries are often spouses, and therefore, not volunteers in the traditional sense, but partners in life, who have provided support to their spouses with the expectation that they will be supported after the death of their spouses. Finally, there are several potential procedural difficulties if creditors are permitted to pursue beneficiaries directly for the proceeds of the RRSPs in their hands.
34I am also satisfied that in order to give full effect to s. 53 as an exemption from the rule that an RRSP designation is a testamentary disposition, and following Kerslake, it would be anomalous to hold that RRSP proceeds that have devolved to the designated beneficiary remain subject to the claims of the creditors of the deceased.
35I therefore conclude that the effect of s. 53 is to except RRSP proceeds in the hands of a designated beneficiary from the claims of creditors of a deceased RRSP owner’s estate.
Issue 3: Should this court reduce the application judge’s award of costs?
36The appellant submits that the application judge erred in his award of costs. He ordered costs payable by the appellant creditor on the partial indemnity scale in the amount of $30,000. The application judge justified the size of the costs award in part on the basis that the application originally included a claim to the life insurance proceeds of $1.27 million, which the appellant abandoned only 4 or 5 days before the hearing, after respondent’s counsel had prepared his factum.
37I agree with the appellant that the application judge erred in this regard. Counsel are encouraged to abandon (or settle) in a timely manner, claims that they conclude are not meritorious. Although the costs award could take some account of the relatively late timing in this case, it is an error to award costs as if $1.27 million were at stake in this application.
38The application judge also viewed the case as putting the entire $82,000 of RRSP proceeds at risk, when the appellant’s claim was for $53,679.28. Under rule 57.01 of the Rules of Civil Procedure, the first factor to be taken into account in considering the appropriate amount to award for costs is the amount in issue. The rule reflects the principle that the costs must be commensurate with the value of the lawsuit to the parties. In that light, an award of costs of $30,000 on the partial indemnity scale constitutes an error in principle, and rather appears to be an award on the substantial indemnity scale.
39I would grant leave to appeal the award of costs and reduce the award to $15,000.
CONCLUSION
40I would dismiss the appeal on the substantive issues, but grant leave to appeal and allow the appeal with respect to costs and reduce the costs awarded to $15,000.
41With respect to the costs of the appeal, this case raised jurisprudential issues for the first time in this court on a matter on which there is significant developing and conflicting case law and legal scholarship. For that reason and also again because of the amount in issue, I would limit the respondent’s costs on the appeal to $15,000 inclusive of disbursements and G.S.T.
Released: June 16, 2004 “JL”
“K. Feldman J.A.”
“I agree John Laskin J.A.”
“I agree S.T. Goudge J.A.”
49.(2) If, in accordance with the terms of a registered plan, an annuitant designated a person to receive a benefit payable under the registered plan in the event of the annuitant's death, (b) the person designated may enforce payment of the benefit, and (c) the benefit is not part of the estate of the annuitant, 51.(2) Subject to subsection (5), if, in accordance with the terms of a registered plan, an annuitant designates a person to receive a benefit payable under the registered plan in the event of the annuitant's death, (b) the person designated may enforce payment of the benefit, and (c) the benefit is not part of the estate of the annuitant; Designation of Beneficiaries Under Benefit Plans Act, R.S.P.E. I. 1998, c. D-9, s. 9: 9. Where a beneficiary is designated, any benefit payable to the beneficiary is not, from the time of the happening of the event upon which it becomes payable, part of the estate of the participant, and is not subject to the claims of the creditors of the participant. Insurance Act R.S.O. 1990, c.I.8 196. (1) Where a beneficiary is designated, the insurance money, from the time of the happening of the event upon which the insurance money becomes payable, is not part of the estate of the insured and is not subject to the claims of the creditors of the insured.
Footnotes
- Law and Equity Act, R.S.B.C. 1996, c. 253:
- See some commentaries on the issue: V. Lindsay & H. Rawding, “Non-Insurance RRSPs After Death: What Are They?” Willpower, CCH, June 2000, No. 66; Anne Werker, “Non-Insurance RRSP Designations – Testamentary Dispositions of Property that do no Form Part of the Estate” (2003) 22 E.T.P.J. 103; B.S. Corbin, “RRSPs: Partial Protection against Creditors?” (2000) 20 E.T.P.J. 33.
- In his article, Barry Corbin suggests that to avoid these potential problems, RRSPs should devolve to the estate and not directly to the designated beneficiary.
