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Posted on January 1st 2011 in Estate Law

Do It Now Before It’s Too Late

How many of us intend to do any number of things, whether it is to lose weight, make a will or start saving for retirement and then never get around to it?! Unfortunately intention and action are not the same thing. This was aptly demonstrated in a recent decision of the Court of Appeal of Manitoba. Although this fact situation took place in Manitoba the equivalent Ontario legislation uses the same wording so the outcome would likely be the same. James had lived with Michelle for 10 years and he considered her his common law wife. When James died Michelle discovered that he had a group life insurance policy in the amount of $55,000. Unfortunately, she was not designated as the beneficiary of the policy. Instead Janet, James’ former common law wife, was to be the recipient.

Michelle brought an application to have the money redirected to her, arguing that James had intended to make her the beneficiary of his life insurance. While both the lower court and the appellate court expressed empathy for Michelle’s predicament, they ruled against her, finding that good intentions were not good enough.

Michelle made a valiant attempt to convince the court of her position. She pointed out a number of things, including:

  • Their involvement for 13 years, for 10 of which they lived together,
  • Owning their house as joint tenants, • Holding a joint line of credit and a joint bank account,
  • James had designated her as the beneficiary of all of his employee benefits, including pension, medical and dental,
  • James had made her his attorney for property,
  • James had qualified Michelle as his spouse in an insurance change of beneficiary form document (he did however leave blank the beneficiary nomination box),
  • James had insured her life as his spouse for $10,000.

For her part, Janet, although she had not had a relationship with James for more than 13 years, argued that James intended to benefit her to compensate her for her financial and emotional support during their cohabitation. The decision ultimately went against Michelle because James, whether he actually meant to or not, did not change the beneficiary designation on this particular policy. Manitoba’s Insurance Act (as does Ontario’s) clearly states that any change to the beneficiary designation must be done in writing. On behalf of the appellate court, Madam Justice Steel stated, “As I said earlier, I would assume that the deceased probably intended that his present partner receive his life insurance proceeds as opposed to his former partner, but that is speculation. Speculation is not sufficient.

The law requires a fair degree of certainty in this area to avoid encouraging litigation.” She went on to say, “The documents which Ms Chanowski would have the court accept as evidence of a change of beneficiary do not provide the necessary clear and express intention to remove Ms Bauer and appoint Ms Chanowski as his beneficiary. They merely speak to Mr. Miterek’s intention to increase the amount of his death benefits and to insure the life of his current common-law wife. One may speculate that it is unusual for an individual to increase the death benefits for a former common-law spouse, but more is needed here than speculation to override a written designation.”

The moral of this story is that if the law requires a document to be in writing then it needs to be in writing for it to be effective. Another lesson this story teaches is that if you are involved in a committed relationship you and your partner should together review all your property to ensure it is going to whom you intend following your death. For more information or assistance with estate planning please contact our firm. We would be happy to help.