Intention to Gift: The Legal Requirements

Intention to Gift: The Legal Requirements

A gift requires three elements  to be legally effected, namely an intention to donate, an acceptance of the gift, and delivery of the gift. All three elements must be present for the gift to be complete, and it is then irrevocable.

The gift is the voluntary transfer of property from one person to another without full consideration.
It is well settled law, as confirmed by the Supreme Court of Canada in the Pecore v Pecore  2007 SCC 17 that the courts look to the intention of the donor at the time of the transfer in order to determine if a gift was actually intended.
Anyone who intends to make a gift of property for little or no consideration must ensure that the intention of the donor is well documented. A Deed of gift given under seal, along with the statutory declaration of the intention to gift is probably the best evidence that the courts will rely upon.
The problem however is that a minority of purported gifts are not substantiated at all as to the intention of the donor, which then forces, the court to assess the reliability of the evidence, if any of intention to gift.
Probably the most common form of contentious gifts are the use of joint tenancy in both real property and investments. By reason of the nature of the joint tenancy, upon the death of a joint tenant, the surviving joint tenant automatically becomes the registered owner of the property by right of survivorship. This happens immediately upon death, and does not form part of the estate of the deceased or attract probate fees.
Common reasons for putting property in joint tenancy is to avoid probate fees or avoid a claim under the wills variation statutes, which are inconsistent with an intention to gift and will typically result in a claim of resulting trust being made against the surviving joint tenant.
Accordingly, a mere transfer of the legal title into joint tenancy is not conclusive as to the transfers intention as the beneficial interest may belong to the estate of the deceased and not the surviving joint tenant unless there was a clear indication of the transfers intention to gift.
While the courts will primarily look at the time of the transfer as to  the intention of the deceased as to whether a gift was intended, the courts may also consider the donors subsequent actions to the extent that those actions are relevant to the donors intention of the time of transfer.

Accordingly, a transfer of title into joint tenancy has three potential legal consequences:

A) an immediate gift of both legal and beneficial title;
B) a transfer of the legal title only, so that the transferee holds the property on a resulting trust for the transferor’s estate;
C) as recognized in the Pecore decision, a transfer of the legal title with a right of survivorship in the asset, but a transfer of beneficial title only upon the death of the transferor.

McKendry v McKendry  2015 BCSC 2433 followed the Pecore case and stated inter alia:

[109]   The legal principles applicable when considering a gratuitous transfer into joint tenancy are not in dispute. The basic question is whether the transferor intended to make a gift, or whether the transferee holds the property transferred on a resulting trust.

[110]   Pecore v. Pecore, 2007 SCC 17, is the leading case.

[111]   It is the actual intention of the transferor at the time of the transfer that is relevant: Pecore, at paras. 5,44 and 59. The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers.

When a transfer is challenged, the presumption allocates the legal burden of proof.

Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended. See Pecore, at paras. 24 and 43.

Rothstein J. also noted (Pecore, at para.44):

[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.

[112]   Accordingly, where a gratuitous transfer is being challenged, the trial judge must begin the inquiry by determining the proper presumption to apply and then weigh all the evidence relating to the actual intention of the transferor to determine whether the presumption has been rebutted: Pecore, at para. 55. In general, evidence of the transferor’s intention at the time of the transfer ought to be contemporaneous, or nearly so to the transaction: Pecore, at para. 56.

Nevertheless, evidence of intention that arises subsequent to a transfer should not automatically be excluded. However, such evidence “must be relevant to the intention of the transferor at the time of the transfer

Notice to Dispute: Understanding the Rules

Notice to Dispute: Understanding the Rules

A party wishing to contest the issuance of a grant of probate or administration may file a Notice to Dispute under Rule 25 (10) of the Supreme Court Rules.

While a notice to dispute is in effect, the registrar must not issue an estate grant. The court may, on application, remove the notice of dispute if the court determines that the filing is not in the best interests of the estate. A notice of dispute is in effect for one year after the date of filing unless renewed or removed by order of the court or the will is proved in solemn form. 

Re: Dow Estate 2015 BCSC 292 stated:

[14]         A person who is interested in an estate including an applicant for the estate grant could apply to set aside the notice of dispute pursuant to Rule 25-10(10). The court may remove the notice of dispute if the court determines that the filing is not in the best interests of the estate (Rule 25-10(11)).

Rule 25-10 — Notices to Dispute

(1)To oppose the issuance of an estate grant, an authorization to obtain estate information or an authorization to obtain resealing information or to oppose the resealing of a foreign grant, a person to whom documents have been or are to be delivered under Rule 25-2 (2) must file a notice of dispute that accords with subrule (3) of this rule before the earlier of:

(a) the issuance of an authorization to obtain estate information or an authorization to obtain resealing information, and

(b) the issuance of an estate grant or the resealing of a foreign grant.

[en. B.C. Reg. 149/2013, s. 8.]

Only one notice of dispute to be filed

(2)A person must not file more than one notice of dispute in relation to any one estate.

[en. B.C. Reg. 149/2013, s. 8.]

Contents of notice to dispute

(3)A notice of dispute referred to in subrule (1) must be in Form P29, must provide an address for service of the disputant, which address for service must be an accessible address that complies with Rule 4-1 (1), and must disclose

(a) that the disputant is a person to whom documents have been or are to be delivered under Rule 25-2 (2), and

(b) the grounds on which the notice of dispute is filed.

[en. B.C. Reg. 149/2013, s. 8.]

Amendment of notice to dispute

(4)A notice of dispute may be amended once without leave of the court, and after that only with leave of the court.

[en. B.C. Reg. 149/2013, s. 8.]

(5)Rule 6-1 (2) and (3) applies to an amendment of a notice of dispute without leave of the court and, for that purpose, a reference in that rule to a pleading is deemed to be a reference to the notice of dispute.

[en. B.C. Reg. 149/2013, s. 8; am. B.C. Reg. 44/2014, Sch. 1, s. 8 (a).]

Renewal of notice of dispute

(6)The court may renew a notice of dispute, for any period the court considers appropriate, as follows:

(a) if the application for renewal is brought before the notice of dispute ceases to be in effect, if the court is satisfied that it is appropriate to make an order for renewal;

(b) if the application for renewal is brought after the notice of dispute ceases to be in effect, if the court is satisfied that

(i) there were good reasons that the application for renewal could not be brought before the notice of dispute ceases to be in effect,

(ii) substantial prejudice would be suffered by the person seeking renewal of the notice of dispute if the order for renewal is not made, and

(iii) no other person interested in the estate would suffer substantial prejudice if the order for renewal is made.

[en. B.C. Reg. 149/2013, s. 8.]

Application for renewal of notice of dispute

(7)Subject to Rule 8-5 (6), an application to renew a notice of dispute filed in relation to an estate must be made on notice to

(a) each person who has submitted for filing a submission for estate grant, or a submission for resealing, in relation to the estate,

(b) each person who has filed a notice of dispute in relation to the estate, and

(c) any other interested person to whom the court directs notice be given.

[en. B.C. Reg. 149/2013, s. 8.]

No grant while notice to dispute in effect

(8)While a notice of dispute is in effect in relation to the estate of a deceased, the registrar must not, with respect to that estate,

(a) issue an estate grant, an authorization to obtain estate information or an authorization to obtain resealing information, or

(b) reseal a foreign grant.

[en. B.C. Reg. 149/2013, s. 8.]

Withdrawal of notice of dispute

(9)A disputant may withdraw a notice of dispute by filing a withdrawal of notice of dispute in Form P30.

[en. B.C. Reg. 149/2013, s. 8.]

Application to remove notice of dispute

(10)A person who is interested in an estate in relation to which a notice of dispute has been filed, including, without limitation, an applicant for an estate grant or for the resealing of a foreign grant, may apply on notice to the disputant for an order removing the notice of dispute.

[en. B.C. Reg. 149/2013, s. 8.]

Grounds on which notice to dispute may be removed

(11)On an application under subrule (10), the court may, by order in Form P31, remove a notice of dispute if the court determines that the filing is not in the best interests of the estate.

[en. B.C. Reg. 149/2013, s. 8.]

When notice of dispute ceases to be in effect

(12)A notice of dispute in relation to an estate ceases to be in effect as follows:

(a) subject to paragraph (b), on the date that is one year after the date on which the notice of dispute was filed;

(b) if the notice of dispute has been renewed under subrule (6), at the end of the renewal period;

(c) if the notice of dispute is withdrawn by the disputant under subrule (9);

(d) if the will in relation to which the notice of dispute relates is proved in solemn form;

(e) if the court orders, under subrule (11) or otherwise, that the notice to dispute is removed.

Removal of Executor/Trustee For Conflict of Interest

Removal of Executor/Trustee For Conflict of Interest

As a BC estate lawyer, I am often asked to remove an executor/trustee. Re Ching 2016 BCSC 1111 is one of several cases where the courts have indicated their reluctance to remove an executor for a perceived conflict of interest. The executor/trustee was however removed and replaced as the conflict of interest was “disabling” to her performance as trustee as opposed to the interests of others.

[22]        The authorities indicate that even a “perceived” conflict of interest between an executor’s personal interests and her obligation to administer the trusts in the will in the interests of the beneficiaries may cause this court to intervene to appoint a new executor or an administrator to avoid even the appearance of conflict. In para. 53 of her response to civil claim filed in the asset recovery action Gini alleges that:

[24]        The executor makes several arguments to support her continuation in that role. She submits, firstly, that the estate is complex and that she has “the most knowledge” of its assets among the three sisters. In my view, this consideration cannot outweigh the conflict between her obligation as executor to call in the assets of the estate and her own interest in asserting that significant assets, that are alleged in the asset recovery action to belong to the estate, actually belong to her.

[25]        Secondly, she submits the testator’s choice of executor ought to be respected. I accept that is a compelling factor and this court has often expressed its reluctance to remove an executor when a conflict of interest is alleged.

[26]        In Parker v. Thompson (Trustee), 2014 BCSC 1916, Hinkson C.J.S.C. at para. 37 wrote the following:

[37]         I accept the principles pertaining to the removal of an estate trustee set out by Madam Justice Nolan in Haines v. Haines, 2012 ONSC 1816 at para. 10 as equally applicable to the removal of the trustee:

In Johnson v. Lanka, 2010 ONSC 4124, (2010), 103 O.R. (3d) 258 at para. 15, Pattillo J. summarized the principles that should guide the court’s discretion in deciding whether to remove estate trustees:

(1) the court will not lightly interfere with the testator’s choice of estate trustee;

(2) clear evidence of necessity is required;

(3) the court’s main consideration is the welfare of the beneficiaries; and

(4) the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.

[27]         The outcome of each application for the removal of an estate trustee will depend on its own facts. The evidence satisfies me that the administration of the estate is endangered if the executor continues to be faced with the conflict of interest inherent in that role.

[28]        Thirdly, the executor submits she has not been guilty of any misconduct in her duties as executor. I make no finding on evidence before me that there has been misconduct but, in my view, even without misconduct the conflict is egregious.

[29]        The executor, lastly, submits that she had little opportunity to administer the trusts before she was prevented from doing so by the notice of dispute. The evidence is that the executor had taken a number of steps to administer the trusts and again those steps illustrate the conflict which has arisen.

[30]        I conclude that Gini, so long as the asset recovery action continues, cannot perform her role as executor without inevitably suffering from a disabling conflict between her own personal interests, as she sees them, and the interests of others.  

[31]        There will be an order that Solus Trust Company Ltd. be appointed administrator of the estate of the testator pending the outcome of the asset recovery action; an order vesting the assets of the testator in Solus Trust for that purpose; an order that Solus Trust is entitled to be paid its fees and disbursements for its administration services in accordance with Schedule A attached to these reasons; and, an order that Pamela and Gini are each entitled to be paid their respective costs of the present application on a full indemnity basis from the estate.

Ensuring Independent Legal Advice

Ensuring Independent Legal Advice

Many transactions are set aside in British Columbia by the courts on the basis that true independent legal advice was not obtained by the person making a radically changed will or transferring an asset for little or no consideration.

A lawyer’s duty in such situations is to be the vanguard of providing true Independent legal advice (ILA) so as to protect  a victim of  undue influence or lack of mental capacity being taken advantage of by an unsavory character.

Thus it is critically important for the lawyer to ensure that he or she is in a position to provide truly independent legal advice to the client.

At any given time I have a case where that has not been the case.

For example a lawyer takes instructions form a daughter of the deceased that her mother wishes to transfer her property into joint tenancy with the daughter.

The lawyer meets with them both at the same time, confirms the instructions with the mother in the presence of the daughter, and transfers the property into joint tenancy for m$1 consideration, and renders the account to the daughter.

The client in that case is the daughter, not the mother. The mother has in effect given away all of her assets to the daughter without the benefit of any legal advice, let alone independent legal advice.

The mother in that scenario might well have balked at doing such had she received true independent legal advice. The lawyer acting for both the daughter and the mother is in a conflict of interest.

7 Reasons a Lawyer Cannot Provide Independent Legal Advice

Accordingly, a lawyer is not in a apposition to provide true independent legal advice if any one of the following is present (not an exhaustive list):

  1. The legal fees are being paid by the person taking advantage under the relationship rather than the person causing the transfer or changing will to be made;
  2. The lawyer does not have a full understanding of the clients total assets, income and expenses and is unable to assess a discuss with the client the extent to which it may leave them vulnerable or impoverished.Detailed notes of the financial situation of the possible victim should be entered contemporaneously.;
  3. The lawyer has a prior professional relationship with the person taking advantage;
  4. Some or all of the instructions have come from the party taking advantage;
  5. The lawyer has a past relationship such as personal, friendship, or the like with the party taking advantage;
  6. The lawyer is acting in a purported joint retainer with the person taking advantage;
  7. The party taking advantage is present at the time the advice or instructions are given or when the documents are signed

If any of the after said situations are present, then it is incumbent on the lawyer to refer the client out to another lawyer for true independent legal advice without any involvement of the party taking advantage.

There is a failure on the part of the lawyer to ask probing questions as to the reason for the will change or transfer of property for no consideration and to ensure that the client attains a true and complete understanding of all its implications.

In my experience as a BC Lawyer,  after a full and complete understanding is brought to bear, clients will often balk at entering into the change of will or property transaction. It is common that elderly persons are often pushed into a transaction based on poor explanation or untruths about other interested parties.