Memorandum

From: Stuart Rennie, Legislation and Law Reform Officer
Re: RECENT SUPREME COURT OF CANADA DECISIONS
SOLICITORS and WILLS and TRUSTS PRACTICE

Introduction
Members may be interested in these recent Supreme Court of Canada affecting solicitors and wills and trusts practice.

On May 3, 2007, the Supreme Court of Canada released both Pecore v. Pecore, 2007 SCC 17 and Madsen Estate v. Saylor, 2007 SCC 18.

Unofficial copies of these case are available at: Madsen Estate v. Saylor (http://scc.lexum.umontreal.ca/en/2007/2007scc18/2007scc18.html); andPecore v. Pecore (http://scc.lexum.umontreal.ca/en/2007/2007scc17/2007scc17.html).

Tino (Rosario) Di Bella, of the CBABC Victoria Wills and Trusts Section, has kindly provided a summary and analysis of these two cases as follows:

In two companion decisions released on May 3, 2007, Pecore v. Pecore, 2007 SCC 17 and Madsen Estate v. Saylor, 2007 SCC 18, the Supreme Court of Canada has now reviewed the common law presumptions of advancement and resulting trust where a parent places his or her assets in joint accounts with an adult child.

Where an parent places his or her assets in a joint account with his or her adult child, the question is whether the parent intended to make a gift of the beneficial interest in the accounts upon the parent's death to his or her adult child, or whether the adult child holds the beneficial interest in trust for the parent, either during the parent's lifetime or when the parent dies, for the parent's estate upon a resulting trust.

The Supreme Court laid out the following principles:

1. It removed the historical anomaly that a presumption of advancement would apply between a father and his child and not a mother and her child, and stated that a presumption of advancement applies between a parent and an infant child only.
2. It decided that the presumption of advancement should not apply between a parent and an adult child including transfers between a parent and a "dependent" adult child.
3. As a result, the Court found that a presumption of a resulting trust occurs where there is a gratuitous transfer between a parent and an adult child.
4. The Court confirmed that both the presumption of advancement and the presumption of resulting trust are rebuttable presumptions of law on a balance of probabilities and "that a court will make if insufficient evidence is adduced to displace the presumption." The Court also stated that "the presumptions provide a guide for the courts in resolving disputes over transfers where evidence of the transferor's intent in making the transfer is unavailable or unpersuasive."
5. The Court also ruled that the transfer, whether a gift or a resulting trust, is an inter vivos gift, even if beneficial interest does not transfer until the death of the transferor, with the result that under the law currently, no probate fees are payable upon the death of the parent. Without deciding the issue, the court also stated its opinion that capital gains would not be payable at the time of the transfer where the transferee holds the beneficial interest in trust for the transferor during the transferor's lifetime.

Solicitors who advise parents about placing assets in joint tenancy with their adult children must now ask:

1. Is the intent of the parent to gift the property to the child or does the child take the interest in the property in trust?
2. If a gift, is the intent that the adult child take a beneficial interest immediately, or only at the parent's death or some other specified time?
3. If a trust, what are the terms of the trust, both during the parent's lifetime and upon the death of the parent?

Having determined the parent's intention, it is important that the solicitor prepare appropriate documentation to reflect the parent's intention: if it is a gift, then a deed of gift needs to be prepared and signed by the parent. If it is a trust, what are the terms of the trust, and the adult child should acknowledge in writing the terms of the trust.

Conclusion
Every effort is made the ensure the accuracy of the legal information provided but this information should not be relied upon. If members intend to rely on this legal information, they need to use the relevant official versions of the judicial decisions, statutes or regulations.

If you have any questions, please contact me.

Stuart
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Stuart Rennie
Barrister and Solicitor
Legislation and Law Reform Officer
Canadian Bar Association (British Columbia Branch)
Tel.: (604) 949-1490
Fax: (604) 949-1491
E-mail: Stuart_Rennie@telus.net or srennie@bccba.org

[May 22, 2007]

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