Trevor Todd and Jackson Todd have handled contested estate matters such as joint accounts, joint ownership , gifts vs trust that all deal with the principles of resulting trusts.
Resulting trusts most commonly result from a gratuitous transfer of funds or an asset from one party to another.
The Presumption of Resulting Trust
The presumption of resulting trust is a rebuttable presumption of law that applies to most gratuitous transfers: Pecore v. Pecore, 2007 SCC 17 at para. 24. Equity presumes bargains, not gifts.
Thus, it is presumed that a transferor intended to convey only legal title to a transferee who did not provide consideration and that the transferee holds the beneficial interest in the property in a “resulting trust” in favour of the transferor. The transferee must therefore return the property to the transferor upon request: Pecore at paras. 20 and 24.
The party who obtained the benefit of the transfer must rebut this presumption.
Typically, the transferee must prove on a balance of probabilities that the transferor intended a gift at the time of the transfer, or that there was evidence of the transferor’s contrary intention: Pecore at paras. 24, 25, 43.
Evidence of Intention
In Weaver v. Weaver Estate, 2019 BCSC 132, the court stated:
[62] If the evidence establishes, on a balance of probabilities, that the transferor’s actual intention was to gift the property, then the presumption has been rebutted. It is the intention of the donor at the time of the transfer that is the governing consideration. To rebut the presumption of resulting trust, the donee must show not only that a gift was intended, but that the donor has done everything necessary to transfer the property to the donee and render the transfer legally binding: McKendry v. McKendry, 2017 BCCA 48 [McKendry] at para. 31.
In Fuller v. Harper, 2010 BCCA 421, the Court of Appeal confirmed that the court should only rely on the presumption of resulting trust where there is insufficient evidence to establish the transferor’s actual intent at the time of the transfer:
[47] The effect of the presumption only becomes evident after all the evidence, both direct and circumstantial, on the surrounding circumstances in which the transfer was made, has been weighed. Only if the trial judge is unable to reach a conclusion about the transferor’s actual intention at the time of the transfer, will the presumption be applied to tip the scales in favour of the transferor or his estate: [citations omitted]…
Regarding evidence of after-the-fact conduct which may prove the original intention of the transferor, Justice Rothstein stated the following in Nishi v. Rascal Trucking Ltd., 2013 SCC 33:
[41] Evidence that arises subsequent to a gratuitous transfer can be admissible to show the true intention of the transferor (Pecore, at para. 59). However, it is the intention of the transferor at the time of the transfer that is determinative. The difficulty with subsequent evidence is that it may well be self-serving or the product of a change in intention on the part of the transferor (Pecore, at para. 59).
Schouten Estate v. Swagerman-Schouten, 2014 BCSC 2320, where the court described the care that must be taken when considering evidence of the deceased’s intention:
[6] Care must be taken to guard against after the fact evidence that may be self-serving (Pecore at para. 59; Fuller at para. 49; Chung at para. 51; Anderson at para. 164). The credibility of a witness should be gauged by its harmony with the preponderance of probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions (Farnya v. Chorny, [1952], 2 D.L.R. 354 at 357 (B.C.C.A.), Aujla at para. 36). Care must also be taken not to treat any single type of evidence as determinative but to weigh all of the evidence (Pecore at paras. 55, 68-69). D. Smith J.A. for the court in Fuller at para. 49 put it in a nutshell: “In short, the court must consider if the transferor had any rational purpose for the transfer other than a gift”.
In Bergen v. Bergen, 2013 BCCA 492, the Court focused on the assessment of the presumption when dealing with a joint bank account. Turning to Pecore, the Court in Bergen stated:
[7] It is the third major holding in Pecore, however, with which we are concerned in the case at bar. Under the heading “How Should Courts Treat Survivorship in the Context of a Joint Account?”, Rothstein J. considered the operation of the presumption of resulting trust in the context of joint bank accounts. He began as follows:
In cases where the transferor’s proven intention in opening the joint account was to gift withdrawal rights to the transferee during his or her lifetime (regardless of whether or not the transferee chose to exercise that right) and also to gift the balance of the account to the transferee alone on his or her death through survivorship, courts have had no difficulty finding that the presumption of a resulting trust has been rebutted and the transferee alone is entitled to the balance of the account on the transferor’s death.
In certain cases, however, courts have found that the transferor gratuitously placed his or her assets into a joint account with the transferee with the intention of retaining exclusive control of the account until his or her death, at which time the transferee alone would take the balance through survivorship. …
There may be a number of reasons why an individual would gratuitously transfer assets into a joint account having this intention. A typical reason is that the transferor wishes to have the assistance of the transferee with the management of his or her financial affairs, often because the transferor is ageing or disabled. At the same time, the transferor may wish to avoid probate fees and/or make after-death disposition to the transferee less cumbersome and time consuming. [At paras. 45-7.]
[ Proof of intention was considered in Creyke v. Creyke, 2016 BCCA 499:
[53] The actual intention of the grantor is determined on the whole of the evidence. The presumption of resulting trust is simply a legal assumption the court will make if sufficient evidence on the point is not adduced. In many cases, persuasive and reliable evidence of the grantor’s actual intention may be presented by the parties. The presumption of resulting trust will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities: Pecore at paras. 22-23, 44.
[18] In Franco v. Franco Estate, 2023 BCSC 1015, the court confirmed at para. 42 that “if the transferee leads evidence showing that it is more likely than not that the transferor intended the transfer to be a gift, the presumption does not apply.”
In Fuller v. Harper, 2010 BCCA 421, the Court of Appeal overturned the trial judge’s decision to grant a declaration of trust. At paras. 69–70, the Court of Appeal explained that the legal error related to the application of the presumption of resulting trust, and held that if the trial judge had considered all the direct and circumstantial evidence of actual intent at the time of transfer, the burden of rebutting the presumption would have been met.
Kolic v. Kolic, 2019 BCSC 1463. Justice Punnett provided a helpful summary of the cases dealing with joint accounts and resulting trusts. The plaintiff summarized those principles as follows:
- a)The burden of proof is on the adult child to establish that the jointly held funds were a gift (para. 84, citing Unger v. Unger Estate, 2017 BCSC 1946);
- b)It is the testator’s intent at the time of the transfer that determines whether the right of survivorship applies, or whether a resulting trust arises for the benefit of the estate (para. 85, citing Williams v. Williams Estate, 2018 BCSC 711);
- c)Bank documents indicating a right of survivorship are not necessarily sufficient to rebut the presumption of resulting trust, even where the documents were explained by the bank representatives (paras. 86–88, citing Stade Estate (Re), 2017 BCSC 2354; Madsen Estate v. Saylor, 2007 SCC 18; Kyle Estate v. Kyle, 2017 BCCA 329; Shkuratoff v. Shkuratoff, 2007 BCSC 1061); and
- d)The presence of the giftee when the transfer is made may be a factor favouring upholding the presumption of resulting trust (para. 89, citing Modonese v. Delac Estate, 2011 BCSC 82).
Summary of Resulting Trusts
In summary, where a gratuitous transfer is challenged, the presumption of resulting trust arises and it falls to the surviving transferee to prove that the transferor intended to gift the asset at their death. Otherwise, the asset will be treated as part of the transferor’s estate to be distributed according to their will: Pecore at para. 53.
