Tag: Resulting trust-gift or estate asset?

Gift of House and Bank Accounts to Spouse Upheld as Gifts

In disinherited.com’s last blog, we discussed the Zukanovic v Malkoc case.

There, the court set aside various “gifts” made during the lifetime of the deceased, and found they were held in trust for the estate.

Hamilton v. Jacinto 2011 BCSC 52, although involving different facts altogether, also involved the same legal arguments of one side arguing that the asset was transferred to him or her without consideration, with the intention of gifting that asset, while the opposing party typically arguing that no intention of a gift was shown and that the asset accordingly, is held in trust for the estate.

In this decision, the court held that the transfer of various assets to his 2nd spouse, after the death of his wife of 59 years, was intended by the deceased to be a gift to his new spouse, and that he was competent, and free of undue influence to do so.

In 2003, the plaintiff’s elderly father, a Washington state resident, purchased a house in British Columbia in joint names with the defendant, and opened joint bank accounts with her,using assets of a Washington state trust, of which he was the sole trustee and beneficiary. She contributed no monies to the bank accounts or the house.

After the father’s death in 2004 at age 84, the plaintiff children commenced a court action to set aside the house and bank transactions.

The plaintiffs argued that the defendant held the property in trust for their father’s estate.

The evidence however showed that the father knew what he was doing and acted freely.

The court found that the presumption of resulting trust was rebutted, that there was no undue influence.

Accordingly the action was dismissed in favor of the defendant spouse.

The two contrasting decisions indicate how difficult it can be even for very senior estate specialists such as at disinherited.com, to predict the outcome of such court actions.

The next blog will show how the court penalized the plaintiffs with an award of double costs for failure to accept an offer to settle.

Will Varied to Give Daughter %25 and Favourite Son, %75 of $ One Million Estate

Zukanovic v Malkoc Estate 2011 BCSC 625 is a case of a father disinheriting a daughter in favor of a son who was clearly his favorite.

The testator suffered from diabetes most of his life which resulted in the amputation of a leg prior to his death.

In 2005 the deceased transferred basically his entire estate of approximately $800,000 to his son.

In 2007 he made a will leaving $1000 to his daughter, the forgiveness of a debt of $40,000 to his daughter, and the residue of his estate to his son.

The estate was only $24,000 at the time of his death.

The daughter commenced a court action alleging that the son held the house and shares that had been transferred prior to the death of her father, in trust for his estate.

The properties had been transferred to the son without any consideration.

She subsequently argued that once the assets formed part of the estate, that the 2007 will should be varied in her favor to provide her with an adequate and just award.

The court held that the son held the entire $1 million assets in trust for his father’s estate.

The court ordered that the properties that had been transferred to the fact form part of the estate of the deceased.

The court varied the will, dividing the estate approximately 75% to the favored son, and 25% to the plaintiff daughter, in recognition of the parties divergent circumstances and the testator’s desire to see that his son maintained the business.

disinherited.com applauds this as a correct decision after the court very sensibly closely examined the circumstances of the transfers, in order to try and determine the true intention of the deceased, when he transferred the properties to his son.

For example, the court asked ” why would the deceased do a will in 2007 giving away his assets, when he had already transferred them in 2005 to his son?”

The son had argued that his father gifted him the properties prior to his death, and that therefore they did not form part of his estate, and belonged absolutely to the son.

The court found that when the deceased transferred the properties to his son, he did not intend to transfer of the beneficial ownership of the assets, and merely only transferred the legal interest of the properties.

Most importantly, the court concluded that despite being the registered owner, the son did not practically speaking, exercise control over the assets until after his father’s death.

The court basically asked the question : “when determining whether there was a gratuitous transfer or not, would the deceased have felt constrained for from asking for the return of the properties back to his name, and if he did, with the son have complied”.

The court concluded that the answer to the 1st question was no, and the answer to the 2nd was yes.

Therefore on the balance of probabilities, the court found that the deceased did not intend that the transfers to put the assets beyond his own reach. He demonstrated this in action and words after the date of the transfers.