Powers of attorney are documents that permit a person (the “grantor”) to grant legal standing to another person (the “attorney”), enabling the attorney to deal with the grantor’s property and financial affairs.[1] They are powerful documents and the law in Canada has limited an attorney’s power to act on behalf of the grantor where appropriate.
One such limitation is that an attorney may not make a “testamentary disposition”[2] on behalf of the grantor. This article will focus on the status of this limitation in Canada’s various jurisdictions as it pertains to an attorney’s ability to deal with an incapable grantor’s beneficiary designations.
The limitation that an attorney may not make a testamentary disposition on behalf of the grantor is a sound protective mechanism to avoid financial abuse. For example, just imagine if a grantor’s will could be amended by his attorney after the grantor becomes incapable. Nevertheless, this protective mechanism can have unintended consequences where an attorney is faced with the following scenarios:
- The grantor has a Registered Retirement Savings Plan (RRSP) with a beneficiary designation and has appointed an attorney to act under an enduring power of attorney. The grantor subsequently becomes incapable and then attains the age of 71; or
- The grantor has any type of registered plan with a beneficiary designation and has appointed an attorney to act under an enduring power of attorney. The grantor subsequently becomes incapable and then the attorney switches the incapable donor’s financial institution.
In the first scenario, the RRSP is mandatorily converted into a new plan, a Registered Retirement Income Fund (RRIF). The beneficiary designation on the RRSP does not carry over to the RRIF, even if it is maintained at the same financial institution. This happens without any positive action taken by the attorney and is unavoidable. In the second scenario, the beneficiary designation on the registered plan simply does not carry over to the new plan at the new financial institution.
Since beneficiary designations in respect of registered plans are considered to be testamentary in nature, without legislative intervention, an attorney is unable to designate a beneficiary on the new plan on behalf of the grantor in the scenarios above, potentially preventing the grantor’s testamentary wishes from coming to fruition.
In light of this known and prevalent issue, various jurisdictions in Canada have enacted legislation permitting attorneys acting under enduring powers of attorney to carry over the same designation where an instrument is being renewed, replaced or converted. These jurisdictions are Alberta, British Columbia, Manitoba, New Brunswick, and Saskatchewan. Upon pending legislation coming into force, Prince Edward Island will adopt similar rules. In addition, British Columbia, New Brunswick, Nova Scotia, and Saskatchewan permit a beneficiary designation to be changed with the court’s approval. These rules are nuanced, and we have summarized each of them below:
Alberta:
The Wills and Succession Act (Alberta) provides that, if the designation renews, replaces or converts a similar instrument made by the grantor, a new designation of the same beneficiary may be made, other than by will, by an attorney acting under an enduring power of attorney.[3]
British Columbia:
The Power of Attorney Act (British Columbia) permits an attorney acting under an enduring power of attorney, in an instrument other than a will, to renew, replace or convert a similar instrument made by the grantor, while capable, if the newly designated beneficiary is the same as the beneficiary that was designated in the similar instrument.[4]
In addition, the Power of Attorney Act (British Columbia) permits an attorney to change a beneficiary designation that is made by the grantor if the court authorizes the change.[5]
Manitoba:
The Beneficiary Designation Act (Retirement, Savings and Other Plans) (Manitoba) permits an attorney acting under an enduring power of attorney to designate a person to receive a benefit on the death of the grantor under a plan (1) if the plan renews, replaces or converts a similar plan of the grantor, (2) if the beneficiary designated in the plan is the same person who was the beneficiary designated under the similar plan immediately before the plan was renewed, replace or converted, and (3) if the designation is made by an instrument other than a will and the instrument is signed by the attorney.[6] An attorney would only have such power if the power of attorney confers the power to make the designation or renew, replace or convert a plan.[7]
New Brunswick:
The Enduring Powers of Attorney Act (New Brunswick) permits an attorney acting under an enduring power of attorney, in an instrument other than a will, to make a beneficiary designation in an instrument that renews, replaces or converts a similar instrument made by the grantor if the same beneficiary is designated in both instruments, unless the enduring power of attorney provides otherwise.[8]
In addition, the Enduring Powers of Attorney Act (New Brunswick) permits an attorney to make, change or revoke a beneficiary designation if the court so authorizes, unless the enduring power of attorney provides otherwise.[9]
Nova Scotia:
While the Powers of Attorney Act (Nova Scotia) does not grant a right to an attorney acting under an enduring power of attorney to renew, replace or convert a beneficiary designation, it grants jurisdiction to the court upon application by an attorney to authorize the attorney to make, change or revoke a beneficiary designation.[10]
Saskatchewan:
The King’s Bench Act (Saskatchewan), permits an attorney acting under an enduring power of attorney to make a designation of beneficiary by instrument if the instrument is renewing, replacing or converting the original instrument that was made by the grantor while the grantor had capacity, the instrument is similar to the original instrument and the beneficiary is the same beneficiary that was designated by the grantor in the original instrument.[11]
In addition, The King’s Bench Act (Saskatchewan) permits an attorney to make, change or revoke a designation of beneficiary if the designation, change or revocation of beneficiary is approved by the court.[12]
Other Provinces and Territories:
The Powers of Attorney and Personal Directives Act (Prince Edward Island), received royal assent on November 29, 2023, but has not yet come into force.[13] The Powers of Attorney and Personal Directives Act will provide an attorney duly appointed under an enduring power of attorney with the authority to make a designation in an instrument that renews, replaces or converts a similar instrument made by the grantor, if the same beneficiary is designated in both instruments, subject to the terms of the power of attorney. In addition, the Powers of Attorney and Personal Directives Act (Prince Edward Island) will permit an attorney to make, change or revoke a designation, if the court authorizes the attorney to do so.
The authors are not aware of any similar legislation authorizing an attorney to make, change, or revoke a beneficiary designation in Ontario, Newfoundland and Labrador, Northwest Territories, Nunavut or the Yukon.[14]
If you are an attorney acting under a power of attorney and you need help determining the scope of your authority, we encourage you to speak with a member of our Private Client Services group.
[1] Throughout this article, the terms “grantor” and “attorney” are used for consistency despite different language being used in different pieces of legislation.
[2] At common law a “testamentary disposition” is a disposition that takes effect on death, is revocable during the donor’s lifetime, and effects no change to in the rights of the donor and donee during the lifetime of the donor: Cock v Cooke, (1986) 1 LRP&D 241; and Elliot v Turner, [1944] 2 DLR 313. Various cases have opined that beneficiary designations in respect of registered plans are testamentary dispositions or akin thereto: see Alger et al v. Crumb et al, 2021 ONSC 6076; Fitzgerald Estate v Fitzgerald, 2021 NSSC 355; Flack v. Rossi, 2008 BCSC 670; Fontana v. Fontana, [1987] B.C.J. No. 452; Goguen (Estate of) v. Hachey, 2012 NBCA 56; Mak (Estate) v. Mak, 2021 ONSC 4415; Morrison v. Morrison, 2015 ABQB 769; Richardson Estate v. Mew, [2008] O.J. No. 4892; Roberts v. Roberts, 2021 ABQB 945; Re Rogers (1963), 39 D.L.R. (2d) 141; Tamblyn v. Leach, [1981] M.J. No. 39.
[3] Wills and Succession Act, SA 2010, c W-12.2, ss. 71(2.2)(a), 71(2.3).
[4] Power of Attorney Act, RSBC 1996, c 370, s 20(5)(b)(i). See also the Wills, Estates and Succession Act, SBC 2009, c 13, s. 90.
[5] Power of Attorney Act, RSBC 1996, c 370, s 20(5)(a).
[6] The Beneficiary Designation Act (Retirement, Savings and Other Plans), SM 1992, c 31, s. 2.1(2).
[7] The Beneficiary Designation Act (Retirement, Savings and Other Plans), SM 1992, c 31, s. 2.1(1)(b).
[8] Enduring Powers of Attorney Act, SNB 2019, c 30, s. 7(3)(a).
[9] Enduring Powers of Attorney Act, SNB 2019, c 30, s. 7(3)(c).
[10] Powers of Attorney Act, RSNS 1989, c 352, s. 18(1)(c).
[11] The King’s Bench Act, SS 2023, c 28, s. 10-28(2)(a).
[12] The King’s Bench Act, SS 2023, c 28, s. 10-28(2)(b).
[13] Bill 21, Powers of Attorney and Personal Directives Act, Royal Assent, November 29, 2023.
[14] Note that these issues do not apply to the province of Québec, as a beneficiary may only be designated by will.
