I blogged a few years ago on the old law of presumption of advancement and new law of presumption of resulting trust established in the landmark Supreme Court of Canada Pecore decision. Click here for my previous blog.
The presumption of resulting trust applies in estate contexts when a parent gratuitously transfers his or her assets to an adult child. The court will presume that the child is holding the property in trust for the parent’s estate, unless the child can prove that the transfer was intended to be a gift. In other words, the child has to rebut the presumption of resulting trust if the child claims that the transfer was a gift.
Children who attempt to rebut the presumption of resulting trust need strong evidence that their parent intended to gift them the property. A recent BC judgment in McKendry v McKendry, 2015 BCSC 2433 illustrates that the evidentiary threshold is high to rebut the presumption of resulting trust.
In Mckendry, the deceased died in 2012 and was survived by five adult children, one son and four daughters. In 2008, she transferred title to her home into a joint tenancy with the son. At the time of the transfer, the deceased wanted the son to hold the home in trust for her estate. In that regard, she made two separate trust declarations outlining how the son would divide the home amongst all her children upon her death.
In 2010, the deceased decided to gift the home to the son. She provided in her Will that she gave the home to her son and the residue of her estate to her four daughters in equal shares. However, the deceased did not take steps to transfer the title of the home into the son’s name only. Instead, the home remained in the names of the deceased and the son in joint tenancy.
Upon the death of the deceased, her daughters challenged the gift of the home to the son, arguing that it was held in trust for their mother’s estate. The court held that, because of the conflicting evidence in the form of the deceased’s trust declarations and her Will, the son was unable to rebut the presumption of resulting trust. In particular, the court stated that the son failed to discharge the burden on him to show that in 2008 when the joint tenancy was arranged the deceased intended to make an immediate gift to him of the survivorship interest in the home.
With respect to the 2010 change of intention of the deceased, the court commented that if in 2010 the deceased intended to make a gift of the home to the son, then the deceased failed to take the steps necessary to make a valid, legally binding gift.
The Mckendry decision stands as a cautionary tale to willmakers that they must be certain of their intention before transferring property. It is highly recommended that people consult with professionals to make their intention expressly known and to have professionals guide them through the steps to make a valid and legally binding gift if a gift is indeed intended.
Thank you to Michael Wilson for his assistance with this blog post!