We have already touched elsewhere on the concept of the presumption of resulting trust. There is an old English legal maxim “equity assumes bargains and not gifts”. In essence, no one gets anything for nothing as the starting point for all actions in life.
At one point, there was no such presumption attaching to gifts between parent and child, but that has fallen into judicial disfavour. For gifts given during a person’s lifetime, the responsibility lies upon the recipient to rebut the presumption of resulting trust. If one cannot defeat that presumption, then the law will presume that the recipient was holding the property in trust for the donor. As a simple and ridiculous example, if your parents give you a gift of $50,000 to assist you in the purchase of your first home, that gift is subject to attack and return unless you can prove that a gift was indeed the true intent of your parents. In these circumstances, we always recommend that such a gift be accompanied by some documentary evidence, which can be as simple as a letter confirming the intention of the giving parent.
The concept is to provide evidence as to what the donor’s intention was at the time of the transfer and there is nothing better than evidence created at the time of the gift itself. If no such evidence is available, other material may be put forward. The leading case in all of this is in Pecore v Pecore, a decision of the Supreme Court of Canada in 2007. Even a simple Google search on this issue will bring up the notorious case of Pecore. The courts have decided that these are the types of evidence that should be looked at when attempting to determine what was the donor’s actual intention.
- Evidence of the transferor’ s intention and actions after the transfer;
- The wording in relevant bank or financial institution documents;
- Control and use of the funds in the accounts;
- The terms of any power of attorney granted to the recipient;
- The tax treatment of the accounts; and
- Testimony of the lawyers, financial advisors and bank tellers dealing with the transferor’s intention.
The net effect is a field day for lawyers as one can begin a search for an almost inexhaustible sources of information as to why A gave money to B.
We can give no better advice than to put something in writing at the time of the gift, or better yet have a lawyer prepare something as simple as a Deed of Gift.