Electronic Designation of Beneficiaries

From time to time the question of electronic wills is raised for discussion. This Uniform Law Conference has visited the topic a couple of times.

I have a related question today: should people be able to use electronic means to designate beneficiaries of savings plans (pension plans, RRSPs, TFSAs etc.) or insurance policies? If so, how? And if not, why not?

Usually such designations have be in writing and signed. The Uniform Electronic Commerce Act permits both e-documents and e-signatures. However, the UECA excludes wills and codicils. Most if not all provinces and territories have adopted this exclusion.

It is not clear whether a beneficiary designation is a will (or codicil). On the one hand, the effect is testamentary: the designation says what happens to assets or proceeds after the owner’s death. On the other hand, the formalities are less (nothing about witnesses, for example), and the language of wills is not used – arguably showing an intention not to treat these documents as wills.

So it makes sense to remove doubt by legislation – if one wanted to allow e-designations.

There are a number of legislative options, and jurisdictions may choose their own.

A: Amend the e-commerce/e-transactions/e-information statute to say that beneficiary designations are not wills or codicils (so the Act applies to them.)

B: Amend the statutes that mention plans (if any) to allow electronic designations, e.g. in Ontario, the Succession Law Reform Act, the Insurance Act.

I understand that BC has amended its wills statute to say that a designation is not a will, and its insurance legislation to allow e-designations that conform to the Electronic Transactions Act.

I understand that Alberta has changed its insurance statute(s) to allow for e-designations.

If allowing e-designations, are there any protections to build in? It is common that people acting under a power of attorney cannot make wills for the beneficiary … or change beneficiaries of plans. Do we need to spell out that limit again?

Normally the designations are done by the owner with a financial institution or insurance company that has already has a business relationship with the person and has established a means of authentication (or establishes it for other purposes, such as payment, at the time of the designation.) This makes the matter safer than, say, a will that might be made at large and pulled out of the ether by a purported beneficiary after the death of the testator.

So the law can probably safely leave authentication and authority questions to the plan administrators (given that they would run the risk of having to pay twice if they paid to a wrongfully designated beneficiary).

Alberta apparently requires that the designation be made directly between the insured and the insurer, and allows the Superintendent of insurance to make regulations with extra protections.

Do we want different rules for e-communications for different purposes, or with different parties?

Is there a difference for this purpose between savings plans (pensions, RRSPs, TFSAs) and insurance policies?

Is there a difference between establishing the plan, making the initial designation and amending it?

Bottom line: would you be comfortable if the law simply allowed electronic designation of beneficiaries of savings plans and insurance policies, without more?

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