My Parent Added My Sibling To Title And Then Passed Away. What Now?

Do you have a parent who transferred a title to property into joint tenancy with someone else, such as one of your siblings? Did that person provide little to no consideration for the acquisition of the property? Has your parent now passed away and is that person claiming sole ownership of the property? Does this affect your distribution under the terms of a will?  This blog will attempt to demystify what’s known in estate law as a resulting trust claim.

As a person ages, they may seek assistance to carry out their finances. For example, a parent may add an adult child to their bank account as a joint account holder or transfer the family home to their child. Upon their passing, this can creates complications. For instance, when the parent had other children who were not added as joint account holders or were not transferred an interest in real property.  The parent has now passed away and the child who was the transferee will now be the sole owner of the property.

What Is The Right of Survivorship?

Where a person jointly owns property with another person and then passes away, the entire interest in that property passes to the other owner. In law, this is known as the “right of survivorship.” Often, the person who retains ownership of the property is an adult child who has not been given any consideration for the transfer. In these circumstances, other beneficiaries of the estate may argue that the intention of the testator (parent) was never to gift the property to the adult child. Rather, the testator’s intention was for the adult child to assist with managing their finances or to avoid paying probate fees. In these cases, the “presumption of a resulting trust” applies.

How is A Presumption of Resulting Trust Determined?

As seen in the landmark Supreme Court of Canada case of Pecore v. Pecore, 2007 SCC 17 (“Pecore”), in the absence of proof that the testator intended to gift the property to another person, the presumption of a resulting trust will apply. This common law rule states that in order for a gift to a single party to be valid, there must be evidence in writing to form such a gift. The presumption of a resulting trust ‘reverses’ the transfer and the onus is on the party claiming a gift to rebut the presumption on a balance of probabilities. The Court’s analysis is on the actual intention of the transferor. As equity presumes bargains and not gifts, the presumption is that the transferee is holding the property on a resulting trust for the transferor’s estate.

The presumption of a resulting trust applies to adult children only. The “presumption of advancement” applies to transfers to minor children, where the presumption is that a gift was intended.

How Do you Rebut the Presumption of Resulting Trust?

The Court in Pecore at paragraphs 42 – 44 held that either the presumption of advancement or the presumption of a resulting trust may be rebutted by evidence on the ordinary civil standard of a balance of probabilities:

[42]      There has been some debate amongst courts and commentators over what amount of evidence is [page814] required to rebut a presumption. With regard to the presumption of resulting trust, some cases appear to suggest that the criminal standard, or at least a standard higher than the civil standard, is applicable: see e.g. Bayley v. Trusts and Guarantee Co., 1930 CanLII 427 (ON CA), [1931] 1 D.L.R. 500 (Ont. S.C., App. Div.), at p. 505; Johnstone v. Johnstone (1913), 12 D.L.R. 537 (Ont. S.C., App. Div.), at p. 539. As for the presumption of advancement, some cases seem to suggest that only slight evidence will be required to rebut the presumptions: see e.g. Pettitt v. Pettitt, [1970] A.C. 777 (H.L.), at p. 814; McGrath v. Wallis, [1995] 2 F.L.R. 114 (Eng. C.A.), at pp. 115 and 122; Dreger (Litigation Guardian of) v. Dreger (1994), 1994 CanLII 16643 (MB CA), 5 E.T.R. (2d) 250 (Man. C.A.), at para. 31.

[43]      The weight of recent authority, however, suggests that the civil standard, the balance of probabilities, is applicable to rebut the presumptions: Burns Estate v. Mellon (2000), 2000 CanLII 5739 (ON CA), 48 O.R. (3d) 641 (C.A.), at paras. 5-21Lohia v. Lohia, [2001] EWCA Civ 1691 (BAILII), at paras. 19-21; Dagle, at p. 210; Re Wilson, at para. 52. See also Sopinka et al., at p. 116. This is also my view. I see no reason to depart from the normal civil standard of proof. The evidence required to rebut both presumptions, therefore, is evidence of the transferor’s contrary intention on the balance of probabilities.

[44]      As in other civil cases, regardless of the legal burden, both sides to the dispute will normally bring evidence to support their position. The trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention. Thus, as discussed by Sopinka et al. in The Law of Evidence in Canada, at p. 116, the presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities.

What’s The Best Way To Avoid This?

A parent should always document their intention when making a transfer of property to an adult child. In the case of Wong v Huang 2012 BCSC 975 (“Wong”), the court, in affirming Pecore, held that only the intention of the transferor is relevant, and intention is determined at the time of the transfer. In Wong, the transferor transferred interest in property to a minor child. However, the transferor was not a parent to the child (the child was his six-year-old great nephew) so the presumption of advancement did not apply. The minor child had to prove on a balance of probabilities that the transferor’s intention was to gift a one-half interest in the property to the minor child in order to rebut the presumption of a resulting trust. The court in this case found sufficient evidence to rebut the presumption and held that the intention of the transferor was to make an unconditional gift to the minor child of a one-half interest in the real property.

There is a high evidentiary threshold to rebut the presumption of a resulting trust and this area of law can be technical and complicated. Please contact YLaw Group at 604-974-9529 if you require assistance with your resulting trust claim.

**This article was written by Estate Litigation Lawyer Dana M. Rogers.