Steinbach MLA and Justice Minister Kelvin Goertzen announced that the Manitoba government has introduced proposed legislation to amend the Beneficiary Designation Act (Retirement, Saving and Other Plans) to allow authorized substitute decision-makers to maintain the original beneficiary designation when the plan is changed, converted or moved to a new financial institution.
“Under the current law, if a substitute decision-maker is moving or changing a financial instrument such as an RRSP, RRIF or TFSA for a person who cannot act on their own behalf, they are unable to keep the original designated beneficiary that was named,” said Goertzen. “That frustrates the intention of the person who established the financial plan but who is no longer able to act for themselves. Amendments to the act will ensure the original intention can be honoured.”
When a legal representative is acting in the best interests of a person who cannot manage their own affairs and transferring assets to another financial institution or moving retirement savings plan proceeds, the subsequent Registered Retirement Savings Plan (RRSP), Registered Retirement Investment Fund (RRIF) or Tax-Free Savings Account (TFSA) is a considered to be a new plan. Under existing legislation, when a new plan is established, beneficiaries designated under the old plan are not transferred to the new plan, so the person no longer has the capacity to designate beneficiaries under the new plan and the substitute decision-maker cannot make a designation for the individual.
“In these scenarios, the gift the person intended to provide cannot be made due to the limitations of current legislation,” said Goertzen. “These amendments were created in response to requests from the Manitoba Law Reform Commission and at the request of major financial institutions, allowing certain legal representatives to now ‘carry over’ these same designations when a plan is renewed, replaced or converted.”
Several other jurisdictions, including British Columbia, Alberta, New Brunswick and Nova Scotia, already allow substitute decision-makers to carry over a beneficiary designation in such situations, the minister noted.
