The Supreme Court of Canada has confirmed that, when assets are transferred from a parent to an adult child without anything given in return, the default presumption is that the child holds those assets beneficially for the parent. This is known as the presumption of resulting trust. In the estate context, it means that any property gratuitously  transferred to an adult child during the parent’s life will presumptively become part of the parent’s estate after their death. However, an adult child can rebut the presumption (and retain the assets) by demonstrating that the parent intended to gift the assets outright.

In Winstanley v. Winstanley, 2017 BCCA 265, the Court of Appeal was asked to determine whether a trial judge had correctly applied the law regarding the presumption of resulting trust. At issue were certain transfers that had been made from the assets of an elderly parent into a joint bank account held by that parent and her adult son. When the parent passed away, the son claimed, through the right of survivorship, that he was entitled to the funds.

The adult son had made the bulk of the transfers himself, both before and after the death of the parent. At trial, these were challenged by the other, older son of the deceased, on the basis that the presumption of resulting trust applied.  However, the trial judge found that, as a whole, the funds were not subject to a resulting trust, and that the parent had intended that her younger son beneficially receive all the funds in their joint account after her death.

On appeal, the court overturned the trial judge’s decision, finding that the judge erred by failing to apply and review the presumption for each specific transfer. He had instead characterized them as a group. On this basis, the court ruled that a new trial would need to occur, as it did not have the appropriate evidence before it to decide the intentions of the deceased regarding the individual transfers.

The court also affirmed that, once the facts necessary to establish the presumption of resulting trust have been shown, the onus (burden) to provide evidence shifts to the party trying to displace it. If that party cannot provide sufficient evidence indicating an intent to gift, the presumption will hold.

Finally, the older son had also made a claim at trial of “undue influence” over the parent by his younger brother in relation to the transfers, which had been dismissed by the trial judge. On appeal, however, the court ruled that the trial judge had not clearly applied the relevant law (para 61):

[61]         It is not clear from the judge’s analysis whether he found that Andrew failed to meet the burden of establishing undue influence or whether he was satisfied by Carl’s evidence that the presumption of undue influence had been rebutted. The correct analysis required the judge to instruct himself on the law and determine whether the presumption of undue influence was applicable based on Jessie and Carl’s relationship. Once the proper onus was applied, the judge should then have considered the evidence and determined if the applicable onus had been met.

This decision once again confirms that, if a joint tenancy is to form part of one’s estate planning, it is essential to provide clear evidence of one’s intent regarding the nature of that joint tenancy to those affected by it.

Emily Clough, a partner in our Estates & Trusts group, was counsel for the successful applicant.