In a recent case, the Ontario Court of Appeal, Fair v. BMO Nesbitt Burns Inc., 2022 ONCA 711, looked into the issue of beneficiary designations, the fiduciary duties of an investment counsellor and whether those designations could be changed.
Mr. and Mrs. Fair were married for 10 years. It was a second marriage. Mr. Fair had three adult children from a prior marriage.
They both had investment accounts with BMO Nesbitt, Burns. These accounts were individual accounts, his and hers. They were not “joint accounts”.
Shortly before his death in November 2016, Mr. Fair changed the beneficiary designation from his wife to his three children.
Can he do this? Does BMO Nesbitt, Burns have to tell his wife? The Court answered “no”.
Mrs. Fair brought an action in Court alleging:
- It was a breach of an agreement she had with Mr.Fair
- The children held the funds in trust for her, and
- BMO Nesbitt, Burns breached its obligation to tell her.
The Court concluded:
- BMO Nesbitt Burns had no such disclosure duty
- Mr. and Mrs. Fair had separate accounts
- They agreed to share information and that was that
- There was no evidence whatsoever about any restriction on beneficiary designations or changes.
While this may have come as a shock to Mrs. Fair, after all, when he died, she still had him as the beneficiary on her accounts, there was no evidence of any kind of enforceable agreement between the two of the (like joint tenancy), of anything that would have involved their investment counsellor.
There are options available to protect one’s interest in the case of a second marriage, where the spouse has children of a prior marriage, but these are not them.
Brian Madigan LL.B., Broker