The Will versus the beneficiary designation – which should prevail?

We all generally understand that the last insurance beneficiary named supersedes all other beneficiaries who were previously named. That’s true whether the beneficiary is named in a Will by declaration or on an insurance carrier’s beneficiary designation form.

But there are best practices for making a beneficiary declaration in a Will. Sharing complete information is the key. The case of Bryan Bendara is proof of this statement (see Manufacturers Life Insurance Company v. Bendera, Plischke, and Kaletzke, 2017 MBQB 162 (CanLII).

Bryan Bendara had a group life insurance policy. In 2010, he completed a revocable beneficiary designation form naming his sister and cousin as the beneficiaries and filed the form with the insurance carrier.

In 2015, Bryan made a Will that contained a clause titled “Beneficiary Designation.” That clause directed that any entitlement under a life insurance policy should be paid to his estate. His sister and cousin would therefore receive less of the insurance proceeds than they would have under the original beneficiary designation form filed with the insurance carrier. The executor of Bryan’s Will would share in the proceeds and would receive the remainder of the funds.

Later that year Bryan died and his Will was probated. Bryan’s sister and cousin challenged the beneficiary declaration in the Will. They argued that the Will did not supersede the insurance carrier’s beneficiary designation form.

The dispute arose because the Manitoba Insurance Act requires that a beneficiary declaration identify the insurance contract by policy number, insurance carrier and effective date. Bryan’s Will did not address this information.

The court concluded that it could excuse the lack of detail about the insurance contract in a Will as long as the beneficiary declaration:

is in writing

is signed by the insured

references the notion of insurance, and

demonstrates a clear intention to designate beneficiaries for the referenced insurance.

The court was prepared to accept this low threshold for compliance since this approach has been supported by other court decisions.

Additional facts that supported Bryan’s intention to change the beneficiaries of his insurance policy were also important to the court’s decision:

Four days after drafting the Will, Bryan’s lawyer sent a letter and copy of the Will to the insurance carrier. The letter referenced the group policy and specifically drew attention to the beneficiary declaration. The letter asked the carrier to update its records accordingly.

There was little change in the value of the estate’s assets from the time the beneficiary designation form was completed to when the Will’s beneficiary declaration was completed. The court concluded that it made sense for Bryan to make the proceeds of his group insurance policy payable to his estate since doing this would give his estate sufficient funds to pay funeral expenses and administrative costs. Making his estate the beneficiary also meant that the proceeds could satisfy a good portion of the specific bequests in his Will.

While his Will didn’t include insurance policy details, Bryan’s actions clearly showed his intention to have the beneficiary designation changed. Those actions were enough for the court to determine that the beneficiary of the insurance policy was Bryan’s estate.

This case is a good reminder that it’s best to share as much information as possible about your intentions for the distribution of your estate. If Bryan had expressed his intentions to his sister and cousin, it might have been enough to prevent litigation.

The case of Bryan Bendara also shows that the law as it relates to provincial insurance acts is always subject to the

court’s interpretation and what’s decided in one common-law jurisdiction may differ from another.

February 2018