Was it Gifted? Resulting Trust and Estate Disputes

In British Columbia, will writers have many estate planning tools at their disposal to create a plan that suits their individual needs best. In previous articles, we’ve discussed many tools which will writers can use to their advantage. However, large transfers of property, funds or other assets are often the subject of estate litigation. In this article, we’ll discuss estate litigation arising from gifts and the presumption of resulting trust. 

What is Inter Vivos Gifting?

Inter vivos gifting describes when a will writer gives pieces of their estate as gifts during their lifetime. This can benefit both will writers and their beneficiaries as gifts are not subject to tax or probate fees. Gifting estate assets before the will writer dies can maximize the net value of the estate for its beneficiaries. This is because the gifted assets will not be subject to probate. In BC, assets in wills are subject to a probate fee of roughly 1.4% of the total value of the estate.

However, it is not uncommon for such inter vivos gifting to give rise to estate litigation. Sometimes, family members may claim against the estate if they expected to inherit certain assets that have already been transferred or gifted. They assert that the estate still holds the asset on a resulting trust. When a transfer, particularly of a large asset, occurs without payment and it’s not expressly clear if it was intended as a gift, a presumed resulting trust is created. Under these circumstances, the law considers the person who received the assets as a trustee. They hold the assets for the benefit of the rightful beneficiary or beneficiaries.

Avoiding Litigation and Presumption of Resulting Trust

Will writers planning to incorporate inter vivos gifting into their estate plan should always clarify when they intend a transfer to be a gift. Given the presumption of resulting trust in British Columbia, individuals must prove that they transferred the asset as a gift if a conflict arises. The presumption of resulting trust means that the courts will presume that a transfer with no consideration (payment) was not intended to be a gift to the receiver. The party claiming the asset as a gift must provide clear evidence demonstrating the intention of the transfer as a gift to rebut this presumption.

When intending to transfer an asset as a gift, will writers should make it abundantly clear and avoid creating a resulting trust to prevent conflict and potential litigation. Will writers can ensure efficient and peaceful administration of their estate by planning carefully and communicating their intentions with their family and friends. Using precise language in documents relating to the transfer of the gift can help ensure there is no question of intentions which may give rise to estate litigation. To avoid any surprises to beneficiaries and to make the estate administration process as seamless as possible, will writers should discuss their estate division plans with their family.

An Example From Caselaw

In the 2005 case of Cook v. Miller (Estate), one of the key pieces of evidence to rebut the presumption of resulting trust was provided by the will writer’s solicitor. The solicitor provided an affidavit which confirmed the will writer knew the transfer of assets to a joint account with his daughter would give her immediate right of survivorship over the assets upon his death. He intended to keep the asset outside his estate and inaccessible to his other children. This, along with words to the effect that he intended to gift the asset to his daughter persuaded the court both initially and upon appeal that a resulting trust did not exist. 

Providing evidence of your intentions for your estate assets can avoid ambiguity and unwanted outcomes in your estate administration. If you have a question about a gifted asset contact an experienced lawyer today. We’ll make sure your testamentary intentions are clear in your estate plan.

Have a question about this topic or a different legal topic? Contact us for a consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.