KUNKA ESTATE V GIASSON

Ending the uncertainty on beneficiary designations

By Apeksha Jain and Victory Adeosun

When you name a beneficiary on your TFSA or RRIF, you would generally expect that person to receive those funds on your death – without court involvement, and without the assets passing through your estate. For several years, however, a line of decisions created genuine uncertainty: a legal principle known as the presumption of resulting trust began to surface in disputes over registered accounts, with some court decisions claiming that TFSA and RRIF proceeds could revert back into the estate and effectively override a deceased’s written designation.

In March of this year, Justice Horvat resolved that uncertainty in his decision in Ontario Superior Court case of Kunka Estate v Giasson, where he confirmed that beneficiary designations on registered plans are testamentary dispositions governed by Part III of the Succession Law Reform Act (“SLRA”) and are not subject to the presumption of resulting trust.[1]

FACTS OF THE CASE

Ernie Kunka had been in a common-law relationship with Marie Olar for over thirty years. When Marie died in November 2021, Ernie received her TFSA and RRIF as her designated beneficiary. Marie’s two adult children, Ann-Marie Mills and Michael Olar, were beneficiaries in Ernie’s will.[2] In the months following Marie’s death, Ernie rekindled a long-standing friendship with Angèle Giasson. The relationship deepened, and by early 2023, Ernie changed the beneficiary designations on both his TFSA and RRIF to name Giasson.

Later that year, Ernie updated his will and he left his home and remaining estate assets to Mills and Olar but said nothing about the registered accounts, keeping them deliberately separate.[3] When Ernie died in August of 2023, Mills brought an application to have the TFSA and RRIF paid into the estate rather than to Giasson based on the following two arguments:

1. That a presumption of resulting from the case of Pecore operated to override the designations;

   In the alternative, 

2. That Ernie had been unduly influenced into making the beneficiary designations and they should be set aside.

CAN A BENEFICIARY DESIGNATION BE OVERRIDDEN?

Mills relied on the 2007 Supreme Court of Canada decision in Pecore v Pecore and the 2020 Ontario Superior Court decision of Calmusky v Calmusky to argue that a presumption of a resulting trust applies to the TFSA and the RRIF, which would cause both to revert to the Estate and shift the onus to Giasson to prove that Ernie intended to gift the TFSA and the RRIF to her on his death. The 2020 Calmusky decision was a controversial case that extended the principle of resulting trusts to RRIF beneficiary designations, generating significant concern among financial institutions, planners, and estate lawyers across the province.[4]

Justice Horvat rejected that extension and distinguished Pecore by clarifying that it dealt with a father adding his daughter as a joint account holder on a bank account, giving her immediate access to the funds during his lifetime, whereas a TFSA or RRIF beneficiary designation operates entirely differently. The designated person acquires no interest in, and has no access to the account until the moment the account holder dies. There is no transfer during the holder’s lifetime at all and therefore no basis for a resulting trust presumption rooted in inter vivos gift law.[5]

The court grounded its analysis in the text of the SLRA, which at Section 51(1) expressly permits a plan participant to designate a beneficiary to receive registered plan proceeds on death, and s 53 obligates the plan administrator to pay those proceeds to the designated beneficiary accordingly. The legislation was never designed to be displaced by a trust doctrine intended for a different category of transfer entirely.[6]

INTENTION AND UNDUE INFLUENCE

With no resulting trust presumption in play, the burden fell on Mills to establish that Ernie had intended the TFSA and RRIF to form part of his estate. She was unable to do so. The argument that the accounts had been funded by Marie’s estate and therefore morally belonged to her children, carried no legal weight. Once Ernie inherited those funds, they became his, absolutely. His deliberate decision to re-designate the accounts three months before updating his will, while making no mention of them in that will, pointed clearly to an intention to keep them separate.[7]

The undue influence claim was similarly unsuccessful. There was no evidence of coercion or domination. On the contrary, the record showed that Giasson declined Ernie’s marriage proposals, which would have been the simpler path to financial gain and maintained clear boundaries, including refusing to attend meetings with his lawyer.

WHAT THIS MEANS FOR ESTATE PLANNING

The practical takeaways from this decision are ones every person with a TFSA or RRIF should keep in mind:

• Your designation is your decision, and it will be honoured.

  A court will not lightly undo it because a family member is unhappy with the outcome.

• Your will does not control your registered accounts.

  These are separate instruments. Updating your will has no effect on who receives your TFSA or RRIF, unless you make beneficiary designations through your will. Even then, your will and registered account beneficiary designations must be updated independently and not contain contradictory instructions.

• Life changes require a designation review.

  Separation, divorce, new relationships, the death of a spouse, all of these should trigger a conversation about whether your current designations still reflect your wishes.

• If you want the estate to receive the funds, let your will reflect that.

  The default is that a named individual receives the proceeds directly. If your intention is different, you need to designate the estate expressly.

For questions about beneficiary designations, registered accounts, or estate planning in Ontario, please contact Apeksha Jain at ajain@sorbaralaw.com.