Manitoba Law Reform Commission Releases Consultation Report on Beneficiary Designations
24 May 2018
By Gurinder Cheema
On April 10th, the Manitoba Law Reform Commission (MLRC) released its Consultation Report, The Beneficiary Designation Act (Retirement, Savings, and Other Plans). The report “considers possible amendments to improve the legislation and procedure related to beneficiary designations in Manitoba.”
The MLRC report notes a gap in The Beneficiary Designation Act (“the Act”) with respect to beneficiary designations when plans are renewed, replaced or converted. When a new plan is created, the old plan no longer exists and an automatic rollover of plan beneficiary designations does not occur. Therefore, unless a new beneficiary designation is made, proceeds are paid to the plan owner’s estate upon their death.
The MLRC report makes two provisional recommendations:
- Amend The Mental Health Act and The Powers of Attorney Act to clearly provide for a committee or an attorney, pursuant to an enduring power of attorney or a springing power of attorney prompted by the donor becoming mentally incompetent, to re-designate a beneficiary in a plan that renews, replaces, or converts an old plan that designated the beneficiary in a plan under the Act.
- Amend the definition of “participant” in the Act by adding “and, except when the context otherwise requires, includes a committee or attorney empowered to make such a designation pursuant to The Mental Health Act and The Powers of Attorney Act.”
The MLRC also identifies and seeks feedback on the following issues for discussion:
- Should substitute decision makers be empowered to make, change or revoke a beneficiary designation with court approval?
- Should section 13 of The Beneficiary Designation Act remain in its present state?
- Alternatively, should section 13 be amended to include “commencement or termination of a common-law relationship?” If yes, should a section like section 13 be added to The Insurance Act calling for a “Caution” with respect to the termination effect of marriage, divorce, and the commencement or termination of a common-law relationship?
- Should section 13 of the Act be repealed and replaced by ones like sections 17 and 18 of The Wills Act regarding the effect of marriage, the commencement or termination of a common-law relationship, and divorce?
- Can section 12 of the Act be improved by drawing on sections 87 and 88 of the Wills, Estates and Succession Act of British Columbia?
- The Commission seeks input on whether to recommend that the Manitoba Act be amended to provide guidance where multiple beneficiaries are designated.
- Should The Beneficiary Designation Act provide for the appointment of trustees for beneficiaries under plans?
- Should a provision like ss. 71(19) of Alberta’s legislation be added to The Beneficiary Designation Act of Manitoba?
- Should the Commission recommend that Manitoba follow British Columbia’s lead and harmonize the effect of a designated beneficiary predeceasing a plan owner with section 171(1) of The Insurance Act?
- If the Commission recommends the Act be amended to harmonize the effect of a designated beneficiary predeceasing a plan owner with s. 171(1) of The Insurance Act, should it also include a subsection like ss. 25.2 of The Wills Act?
- Given the Court of Appeal Clarke Estate obiter dictum, should the Commission reiterate recommendations 7 and 8 from its Report #73? If so, should the section refer not only to “creditors”, but also to other claimants, such as those pursuant to The Marital Property Act (now called the Family Property Act) and The Dependants Relief Act?
- Should changes be made to The Pension Benefits Act requiring designation forms and status reports contain a caution similar to that required by s. 13 of The Beneficiary Designation Act?
Related BCLI Work
The MLRC report cites BCLI’s Wills, Estates and Succession: A Modern Legal Framework, published in 2006 as part of the Succession Law Reform Project. The BCLI report aimed to “reduce the number of separate succession-related enactments through consolidation and to modernize the statutory and common law dealing with succession on death.” The report made recommendations with respect to the scope of a power of attorney’s authority. It recommended that an attorney be authorized to designate a beneficiary, alter a designation or revoke a designation, provided the attorney is acting under a power of attorney that clearly confers this authority and is granted by a participant. It also recommended that an attorney acting pursuant to an enduring power of attorney, or a representative acting under a representation agreement, be empowered to create a new beneficiary designation that names the same beneficiary as in the participant’s previous beneficiary designation. These changes are reflected in section 20(5) of the Power of Attorney Act and section 85(3) of the Wills, Estates and Succession Act:
20(5) An attorney may, in an instrument other than a will,
(a) change a beneficiary designation made by the adult, if the court authorizes the change, or
(b) create a new beneficiary designation, if the designation is made in
(i) an instrument that is renewing, replacing or converting a similar instrument made by the adult, while capable, and the newly designated beneficiary is the same beneficiary that was designated in the similar instrument, or
(ii) a new instrument that is not renewing, replacing or converting a similar instrument made by the adult, while capable, and the newly designated beneficiary is the adult’s estate.
(85)(3) A person granted power over an adult’s financial affairs under
(a) Part 2 of the Power of Attorney Act, or
(b) the Patients Property Act
may make, alter or revoke a designation under this section only if expressly authorized to do so by the court and the designation is not made in a will.
Section 91 of the Wills, Estates and Succession Act was also recommended by the BCLI report. It reads as follows:
91 If a designated beneficiary dies before the participant, and no disposition of the share of the deceased designated beneficiary is provided for in the designation, the share is payable
(a) to the surviving designated beneficiary,
(b) if there is more than one surviving designated beneficiary, to the surviving designated beneficiaries in equal shares, or
(c) if there is no surviving designated beneficiary, to the participant’s personal representative.
This provision aligns with a section in British Columbia’s Insurance Act of the same effect and unifies the province’s plans legislation.