Can You Use a Power of Attorney to Change a RRSP Beneficiary?

Keith Hawthorne designated his common law spouse, Colleen Desharnais, as the beneficiary of his Registered Retirement Savings Plan at the Toronto Dominion Bank. He also appointed her his attorney under his enduring power of attorney. In fact, he completed two powers of attorney naming her as his attorney each time. But, Keith Hawthorne did not make her beneficiary of his will.

Mr. Hawthorne suffered a brain tumor. He had surgery. Twice. But he lost his competency to make decisions, and he never recovered. Ms. Desharnais was able to assist with his finances, using the power of attorney.

A representative of TD Securities Inc., which is a related company to the Toronto Dominion Bank, suggested to Ms. Desharnais that she could get a better return for Mr. Hawthorne if she transferred the RRSP to TD Securities Inc. She followed the advice, transferring the RRSP to TD Securities Inc.

When she transferred the RRSP, she did not complete the designation of beneficiary form. She assumed the beneficiary would remain the same. TD Securities Inc.’s representative did not advise her about completing the form.

Mr. Hawthorne passed away the following year. TD Securities Inc. paid the RRSP to Mr. Hawthorne’s estate because the designation of beneficiary form was not completed when the RRSP was transferred to TD Securities Inc.

Ms. Desharnais sued both the Toronto Dominion Bank and TD Securities Inc.

In the Supreme Court of British Columbia, Desharnais v. Toronto Dominion Bank, 2001 BCSC 1695, Mr. Justice Clancy held that Ms. Desharnais’ power of attorney did not give her the legal authority to change the designated beneficiary of a RRSP.

Although, the power of attorney gave Ms. Deshaanrais the power to do on behalf of Mr. Hawthorne anything that Mr. Hawthorne could lawfully do by an attorney, this power did not include things that were testamentary (or, as I like to think of it, Will-like) in nature.

Mr. Justice Clancy adopted the following statement from the Legal Education Society of Alberta in its report entitled Enduring Powers of Attorney; Dependent Adults; Living Wills (1991):

It is questionable whether a donor may designate a beneficiary of a pension, insurance policy or Registered Retirement Savings Plan [using a power of attorney]. In the absence of statutory authority to designate a beneficiary, these acts would be testamentary in nature, since they would be "dependant on death for its vigour and effect” (footnote omitted), and accordingly must comply with the Wills Act. It might be possible to designate a beneficiary by an attorney while the donor has capacity but it would be advisable for an attorney to seek the advice and directions of the court if his donor no longer has capacity.

The change in beneficiary—from Ms. Desharnais to no one—was not legal. According to Mr. Justice Clancy,

A valid transfer of the RSP would have required the continuation of the designation of Ms. Desharnais as beneficiary. That action would have been authorized by the power of attorney. It would not have been testamentary in nature.

Mr. Justice Clancy found that TD Securities Inc. and its representative owed Ms. Desharnais a duty to inquire if Mr. Hawthorne had named a beneficiary on the Toronto Dominion Bank RRSP, and advise her to complete the designation to maintain the beneficiary. He held that TD Securities Inc. was liable to pay her the amount of the RRSP she would have received as the beneficiary plus interest on the basis that it was negligent and in breach of its fiduciary duty (or duty of loyalty) to her.

Mr. Justice Clancy also held the Toronto Dominion Bank liable to Ms. Desharnais, on the basis that the Toronto Dominion Bank had a duty to hold the funds instead of permitting an illegal transaction. But, the British Columbia Court of Appeal reversed Mr. Justice Clancy’s holding that the Toronto Dominion Bank was negligent. The Court of Appeal said that Ms. Deshnarnais had not met the onus to establish the scope of the Toronto Dominion Bank’s duty of care to her.

The Court of Appeal did uphold the judgment against TD Securities Inc. You can read the Court of Appeal’s decision here.

It is important that anyone appointed an attorney under a power of attorney, and the financial institutions that deal with the attorney, recognize the limitations on what an attorney may lawfully do under a power of attorney. In this case, the financial institutions involved didn’t until it was too late.

Kovalchuk Decision Tommorow

All those waiting anxiously for word on whether Kovalchuk’s new deal with Devils will be accepted by the NHL should only have to wait one day longer.

On Friday, NHL deputy commissioner Bill Daly confirmed that the Devils submitted a new deal to the NHL for approval. Article 11.5(d) of the NHL CBA states the League has five days to either approve and register the deal, or to reject it.

A quick count on the calendar shows that the five days will be up tomorrow. So hopefully we should know soon whether Kovalchuk will be donning a Devils uniform next season.

Los Angeles Dodgers and the McCourt Divorce

Right now the Los Angeles Dodgers are the children caught in the middle of a very nasty divorce between owners Frank and Jamie McCourt. Both parents want sole custody of the Dodgers, but an agreement signed in 2004, shortly after the McCourts bought the Dodgers, could result in Frank being awarded the team.

This agreement, which split up the couple’s jointly owned property to attempt to protect it from foreclosure by business lenders, specified that all the assets of the Dodgers belonged to Frank separately. Frank, and his lawyers, argue that this is all that is needed to prove that the Dodgers are his.

The problem, according to Jamie, is that she was surprised to learn that she had given away her right to the Dodgers. She swore in an affidavit that “I was never told that by signing the [agreement], I was giving away the Dodgers.” She claims she was misled and trusted Frank to not take advantage of her.

Jamie’s legal team is up against serious odds. It would be hard for a housewife to successfully argue that she didn’t know what she was signing when she signed a contract with her husband. It will be almost impossible for Jamie McCourt to make this argument successfully because she is a lawyer who has handled complicated litigation for the couple’s real estate business. The suggestion that she was misled and did not know what she was signing will be hard for the court to accept.

This divorce has gotten nasty and you can be sure that both sides are racking up significant billable hours by some premier American lawyers. Jamie is even arguing that the document was fraudulently altered, a claim that Frank is denying and plans on calling forensic experts to refute it.

As is often the case, the best option may be for the parents to settle for the sake of the children: both the McCourt’s four sons, and the Dodgers. During this dispute, the Dodgers have been hamstrung in their ability to spend money on player moves. They were largely silent during the offseason and at the trade deadline and have just given away Manny Ramirez on waivers. They have been very average in a winnable division. Hopefully the McCourts can put this mess behind them and the Dodgers can return to their proud tradition of championship baseball.

For more analysis take a look at, Divorce-court drama and the Dodgers, by Lester Munson of ESPN.

Legaltree.ca

Legaltree.ca is a Canadian collaborative legal research resource with links to and information on books, articles, websites and blogs on law by subject matter. It is very comprehensive. I am pleased and flattered that my blog is included in the links under "general wills and estates resources."

Friday Roundup

The Nevada Supreme Court denied the Motion for a Stay of the O.J. trial [pt 2] brought by O.J.'s co-defendant a.k.a. That Poor Soon to be Found Guilty Bastard. (ESPN) So the trial will start Sept. 8. (Review-Journal)

Congratulations to the Latino law student organization at Boyd School of Law: La Voz won Law Student Organization of the Year from the Hispanic National Bar Association.

The New Celebrity Drama or Welcome to Vegas Suge Knight

Yesterday, we reported about the arrest and release on bail of former Hip-Hop mogul and longtime thug Suge Knight. If you don't know much about thuglife Hip-Hop you can read about it here.

Today, the arrest report was released (you can read the full report here).

Las Vegas Now has the highlights:

"This was apparently Marion Knight's girlfriend that was riding with him in his car at the time. She started punching him while in the car (he was the driver and she was the passenger) in an effort to escape, she grabbed the steering wheel and steered it to the curb. That's when she got out of the car and tried to run and he caught up to her," said Lt. Chris Carroll, Metro.

According to the arrest report, the victim, Melissa Isaac, told officers the two started
arguing after he got a phone call from another woman. Isaac said she confronted
him and that Knight started hitting her.

Thank God for Suge Knight. The lack of scandal in town was getting so bad I was actually starting to pay attention to the O.J. trial [pt 2].

Political Post

It's been a busy few days for all things Nevada and political.

First, a Nevada man was arrested with others in a plot to murder Democratic Party Presidential nominee Barack Obama. (Las Vegas Now; Independent)

Then, the Nevada Republican Party got called "inept" by the national Republican Party. Refusing to be out-embarrassed by the ineptitude of the Clark County Democratic Party, which failed to book a convention center large enough to hold all the caucusing delegates earlier this year, the state Republican Party recently attempted (and failed) to appoint, rather than elect delegates to the national Republican convention. (Las Vegas Now)

Finally, lobbyists for the online poker industry gathered in Colorado in an attempt to curry favor with the Democrats to reverse the statutory ban on online poker. (Las Vegas Sun)

The Right to Refuse Medical Treatment

The law in British Columbia is clear that a mentally capable adult may refuse medical treatment, even if his doctors and family consider it to be in his best interests. The Supreme Court of Canada has recently said that the “right to refuse unwanted medical treatment is fundamental to a person’s dignity and autonomy.” There are a number of reasons why a patient may wish to reject his doctor’s recommended treatment: religious grounds, concern about side effects, or concern about risks. In fact, the law protects the right of a competent patient to make foolish decisions.

But what if the patient is mentally ill?

Professor Starson is not a college or university professor. He is a brilliant physicist who has published several papers in his field. Other physicists respect him, and refer to him as Professor Starson. He has also been diagnosed with bipolar disorder, and has been in and out of mental institutions in Canada and the United States. He was involuntarily committed to an institution in Ontario after he had uttered threats against others. He apparently suffers from delusions. He claims to be leading on the edge to build a starship, and that he is a world class skier and arm wrestler.

Professor Starson’s doctor prescribed various medications to alleviate his condition. The doctor is of the opinion that the medications might allow Professor Starson to function better outside of a mental institution and resume his scientific work, and that he would deteriorate without the medication.

The medication would slow down Professor Starson’s thinking. When Professor Starson had taken medications in the past, he found the side affects unbearable. His doctor was of the opinion that the new medications would not have as severe side affects as the medications Professor Starson had taken before. But Professor Starson was concerned that they would dull his thinking. For Professor Starson, the medication’s effects “would be worse than death for me, because I have always considered normal to be a term so boring it would be like death.”

Under the Ontario legislation (the Health Care Consent Act, 1996, S.O. 1996, c. 2, Sch. A) a patient has the right to refuse treatment if he has the ability “to understand the information that is relevant to making a decision about the treatment…and to appreciate the reasonably foreseeable consequences of a decision or lack of decision.” He must be able to understand the information, apply it to his circumstances, and weigh the risks and benefits of the proposed treatment.

A Consent and Capacity Board in Ontario determined that Professor Starson did not have the capacity to refuse treatment. However, the Ontario courts disagreed, and set aside the Board’s decision. The case went to the Supreme Court of Canda.

On June 6, 2003, the Supreme Court of Canada published its decision in Starson v. Swayze, 2003 SCC 32. In a 6 to 3 decision, the majority held that Professor Starson had the right to refuse the medication. According to the majority, although Professor Starson did not agree with the diagnosis of mental illness, he had a sufficient insight into his condition to have the ability to understand the relevant information. He knew that he was not normal, and that he had some problems. The majority also found that there was no basis for the Consent and Capacity Board’s finding that Professor Starson did not appreciate the consequences of refusing treatment.

In practice, it can be very difficult to determine if someone with a significant mental illness has the capacity to refuse treatment. All of the judges of the Supreme Court of Canada agreed on the legal principles to be applied, but three of them found on the evidence that Professor Starson did not have the capacity to refuse treatment.

Great Sports Books (Part 2 of 3)

This is the second entry in a three part series recommending great sports books. These reviews are authored by Ken Bungay, a lawyer who lives in Whitby, Ontario. He is also a big sports fan, knows everything about junior hockey, and loves reading sports books. So there was no person better to ask to write these entries than Ken. In all, Ken will recommend 6 sports books. He's already recommended 2 books and here are his next 2:

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I am a regular follower of the Team 1200 on the Internet and a friend of the Team 1200's resident sports law contributor Eric Macramalla. (Yes, I know Eric is a lawyer, but I try not to hold that against him. Plus he knows a ton of stuff about sports and the law.) So when Eric asked if I would contribute a Guest Blog on the topic of favourite sports books, I was happy to oblige.

1. Slugging it Out in Japan - 1992, Warren Cromartie, with Robert Whiting.

It's about ex-Expo Warren Cromartie's days in Japan and I'm still on an Expos' high just days after his Montreal team-mate Andre Dawson was inducted into the Baseball Hall of Fame. Cromartie, Dawson and Tim Raines were the "I-95" club from south Florida who were Expos together. This book will really appeal to Expo fans. I liked it because of the story of Cro trying to fit into Japanese baseball culture and society. When he landed in Tokyo in 1984, having signed a contract to play for the Tokyo Giants, he must have felt like he was on another planet. This was years before Ichiro Suzuki. Cromartie played for the Giants for 7 seasons, and it doesn't appear he ever got used to the Giants' training regime. Let's put it this way, Guy "Anyone Got a Light" Lafleur would never have survived Tokyo Giants' workouts.

2. A False Spring - 1973, Pat Jordan.

A great read. Jordan is now a recognized sports writer, but in 1959 he was a Connecticut high-school pitching phenom who was a bonus baby - signing a contract with the Milwaukee Braves. Three years later he quit - his fastball and pitching skills long gone. Not so much a book on baseball as a book on life, as Jordan documents his depression and downward spiral in the minor leagues. Jordan: "Professional baseball clubs, unlike most employers, believed that young prospects should be started at the top of their profession each spring and be allowed to sink to the true level of their ability."

Ken

End of Week Roundup

Congratulations to Deanna Brinkerhoff, who was named an associate by Holland & Hart. (Review-Journal)

Speaking of Holland & Hart, congratulations to the firm itself, which was named law firm of the year by the Las Vegas chapter of the National Bar Association. (Holland Hart Blog)

And Vegas has another celebrity trial on the way: former Hip-Hop mogul and longtime thug, "Suge" Knight, is in the Clark County Detention Center after police found him holding a knife and standing over a woman in the western Las Vegas Valley today. He is charged with assault with a deadly weapon, battery domestic violence, possession of a controlled substance and possession of dangerous drugs without a prescription, police said. (Las Vegas Sun) Update: Suge Knight is out on bail. (AP)