An Ontario court draws the line advisors have waited years to see
A named beneficiary on a segregated fund does not presumptively hold the money in trust for the estate, an Ontario court has confirmed, adding to a judicial split that has left advisors and estate planners uncertain since 2020 about whether such designations are secure.
In RBC Life Insurance Company v. Masitch, released March 27, Justice B. Dietrich of the Ontario Superior Court of Justice declined to follow Calmusky v. Calmusky.
That 2020 decision extended the resulting trust presumption to beneficiary designations on registered plans, which the court said had been "ruffling some feathers" among banks, financial advisors and estate planning lawyers in Ontario.
Dietrich preferred the reasoning in Mak (Estate) v. Mak, which held that the Supreme Court of Canada's presumption from Pecore v. Pecore does not reach beneficiary designations at all.
The stakes for planning are direct.
Under Calmusky, a designation naming an adult child could be clawed back into the estate unless that child proved the funds were meant as a gift.
Under the approach Dietrich adopted, the designation stands and the onus shifts to whoever challenges it.
As per the endorsement, the whole point of a beneficiary designation is to state what happens to an asset on death, which the court treated as reason to keep the Pecore presumption out.
One caution attaches to the ruling's weight.
This is a single Superior Court endorsement preferring one trial-level decision, Mak, over another, Calmusky.
It strengthens the Mak side of the divide but does not resolve it, since only an appellate court can settle which line governs.
The facts made the case a clean test.
Valentina Masitch died intestate on December 14, 2023, having named one of her two sons, Dimitri, as sole beneficiary on two RBC Life segregated fund contracts, one non-registered and one a TFSA.
RBC Life paid the proceeds into court in August 2024 after the brothers disagreed over entitlement, and stepped out of the fight.
Dimitri moved for payment out of court; his brother Oleg argued the money should be divided equally.
Oleg submitted that their mother named Dimitri only for administrative convenience, that she had limited English and relied on Dimitri for her finances, and that Dimitri had promised in Oleg's presence to share the proceeds.
Justice Dietrich found the record pointed the other way, noting the mother consulted two named RBC Life advisors about her investments and left handwritten Post-it notes with questions for them, one reading, "Do I have to hav a Vill 2 sons Dim + Oleg."
The judge called the notes "compelling evidence that the Deceased was seeking advice from her advisors at RBC Life," but found they showed no intention to split the proceeds.
Much of Oleg's account was hearsay and uncorroborated, Dietrich wrote, citing the corroboration rule in section 13 of the Evidence Act for claims against a deceased person's estate.
The only corroborated evidence of a promise was a translated video clip in which Dimitri said, "What I had promised to mother is gone with mother."
The court found it mentioned neither the policies nor any specific promise or consideration, and so could not carry Oleg's claim.
Oleg's fallback argument sought a constructive trust under Moore v. Sweet.
Dietrich found he had shown neither unjust enrichment, a corresponding deprivation, nor the absence of a juristic reason, and granted Dimitri's motion.
The judge fixed Dimitri's costs at $4,335.22 on a partial indemnity basis, payable by Oleg within 30 days, and allowed the sum to be deducted from Oleg's share of the estate if he does not pay.
