Beneficiary Designation in Favour of Former Wife Takes Precedence
The decision of the Ontario Court of Appeal in Richardson Estate v. Mew earlier this year demonstrates a judicial reluctance to interfere with the designation of a beneficiary under a life insurance policy.
On the facts, Ms. Ferguson, the widow of Mr. Richardson, claimed the proceeds of a life insurance policy that named Mr. Richardson’s former wife as the beneficiary. Ms. Ferguson and Mr. Richardson married in 1992 after the dissolution of Mr. Richardson’s first marriage of 26 years. Following the first marriage, Mr. Richardson continued to pay premiums on a life insurance policy with his former wife designated as the beneficiary.
The Court found that the beneficiary designation under the life insurance policy took priority over the separation agreement under which Mr. Richardson and his former wife exchanged mutual releases and renounced all rights in each other’s estate. Notably, the Court held that general expressions in releases are not effective to deprive a beneficiary of rights under an insurance policy, and that such general language does not amount to a formal declaration within the meaning of the Ontario Insurance Act.
Although unnecessary to decide the case, the Court of Appeal went on to consider Ms. Ferguson’s argument that she was granted a power of attorney for property by Mr. Richardson, and could have changed the beneficiary designation in her favour before Mr. Richardson’s death. The Court disagreed, stating that as a fiduciary, Ms. Ferguson could only act for the donor’s benefit, and changing the beneficiary of the policy could not be said to be for Mr. Richardson’s benefit.