The Supreme Court of Canada has established that gratuitous transfers of real or personal property between a parent and an adult child come with a rebuttable presumption of resulting trust in favour of the person making the gift. What does this mean?
If a parent creates a joint bank account with an adult child without receiving anything in return, the law presumes that the monies in the joint account were held in trust for the parent during their lifetime and upon their death are held in trust for their estate.
This presumption can, however, be displaced by evidence that the creation of the joint account was a gift from the parent to the child. The adult child must prove that the parent intended to make a gift and, in addition, that the parent did everything necessary to transfer the property to the adult child and render the settlement legally binding on him or her.
The same considerations apply to the creation of a joint interest in real estate although some additional issues can be raised based upon the provisions of provincial law dealing with interests in land.
In the event of a controversy, the evidence of the parent’s intention is generally the governing consideration.
The person who represents the estate is the most appropriate person to respond to any controversial gift for if there is no gift the joint property belongs to the estate. If the person who represents the estate defends a gift to themselves by the deceased family member or friend, they will find themselves in a clear conflict of interest and will have to consider stepping aside from their role as estate representative.
The question of whether a person other than the personal representative can attack such gifts is complicated. In some cases, only the estate of the deceased person can bring a claim. In other cases, persons interested in the deceased’s estate or who are bringing a challenge to vary a will have been allowed by the court to proceed.
The analysis of whether to bring or defend such claims is a combination of practical concerns (Is the case worth it?) and legal analysis (Can we succeed?).
What are the facts that need to be proved? What is the availability of the necessary evidence to prove those facts? What will be the cost to bring a claim? What are the steps that might be taken to resolve the dispute?
The answers to these questions are extremely important. They inform the decision as to how best to respond to any given situation.