Was the Transfer of Family Home Title a Gift?

July 12, 2022
two-level house set against backdrop of trees in fall, representing family home

written on behalf of Feigenbaum Law

The death of a loved one can be an incredibly stressful time for people. A death in the family can significantly impact how a family functions, gets along and relates to one another. This can be especially true in matters that lead to estate litigation, where relationships and budgets can be strained.

It’s not uncommon for legal disputes to arise when family members believe they have been wrongly omitted from a loved one’s Will or they did not receive something from the deceased as expected. This was the case in the Ontario Superior Court’s recent decision of Re Estate of Celeste Dos Santos, in which one sibling sought to have their mother’s home included as part of the estate.

Youngest son lived in family home with deceased

The deceased and her husband moved to Canada from Portugal in 1968 and saved up enough money to buy a house in Toronto. The home had two units, with one being in the basement and main floor and another on the upper floor, the latter of which was rented to a tenant.

The couple had three children, Rui, Luis, and John. John was the youngest of the three children and was two years old when they moved into the home in 1971. Both Rui and Luis eventually moved out of the home, while John never left. He was there when their father died in 1995, and he took over responsibility for the mother’s needs in 1997.

Mother gifted family home to youngest child

At the time of the mother’s death in 2013, Rui discovered that her home was not included in the estate as it had been gifted to his brother, John, in 2001. Rui and Luis believed John was meant to hold the home’s title in trust for their mother while he lived with her. They argued that the principles of a resulting trust should apply as John should not have been able to receive the home without consideration. As a result, they stated, the home should revert back to the estate since John never provided payment for the home.

In response, John submitted that the 12 years he spent caring for his mother’s health and financial needs served as consideration and that his mother intended the home to be given to him instead of forming part of the estate. The Court was tasked with determining whether the mother intended to gift the home to John or to have him hold the title of the house in trust for her estate.

Was the home intended to be a gift?

The parties all agreed that they met with the mother in 2001 to discuss a plan for her health as well as her estate. However, they had differing accounts of what was decided during this meeting. While there were no records of this meeting, the title in the home was transferred to John that same year.

John stated it was agreed that his mother would transfer ownership of the home to him with the understanding that she would continue to live there, with the other two sons receiving some form of compensation for his receiving the house. However, Luis stated he had no idea that the title to the home was transferred to John.

Youngest son provided extensive care for mother; older sons received other property sale proceeds

The Court looked at the role John played in maintaining the home and helping his mother through the last years of her life. The Court found he paid all carrying costs of the home (including taxes and utilities), paid for repairs of the home, managed the apartment on the second floor, took care of his mother’s financial and health needs, and more.

During those 12 years, neither Rui nor Luis questioned the role John played in the home or their mother’s care. There was no indication that John ever hid or misrepresented his involvement with their mother and the home. In addition, the Court found that Rui and Luis received proceeds from the sale of a property the mother owned in Portugal, while John received nothing.

Recipient must prove testator intended property transfer to be a gift

The Court cited the 2007 decision of the Supreme Court of Canada in Pecore v. Pecore, which states that a resulting trust should be presumed when a parent gives a child an asset like a home prior to their death. However, there are situations when such a transaction should be considered a gift. The person receiving the asset must prove, on a balance of probabilities, that it was the transferor’s intention for the transfer to be a gift.

To rebut the presumption of a resulting trust and establish a gift, the Court must find three elements:

  1. An intention on the part of the donor to make a gift;
  2. An acceptance of the gift by the recipient; and
  3. A sufficient act of delivery or transfer of the property to complete the transaction.

Presumption of resulting trust rebutted by circumstances

Rui conceded that the second and third elements of the Pecore test were met but argued that his mother never intended the home transfer to be a gift. He stated that the home was transferred to John so he could help manage their mother’s affairs. However, the Court disagreed with this argument as there was no need for John to have the property’s title to pay taxes or even to borrow against the home.

The Court found that the transfer of the title of the home in and of itself was not enough to establish the mother’s intent to gift the property. However, the Court highlighted the gift of the sale proceeds from the Portugal property to Rui and Luis, which were equal to their share of equity in the home. In addition, there was no objection to John’s management of the home or their mother’s affairs during the 12 years preceding her death. As a result, the transfer was found to be a gift and not a resulting trust.

Contact Feigenbaum Consulting in Toronto for Comprehensive Estate Litigation Advice

Feigenbaum Consulting founder Mark Feigenbaum is a deeply knowledgeable and experienced lawyer and tax professional. The firm provides effective estate planning services to help clients avoid the legal and financial risks that can arise in planning for their future and advocates for clients when litigation arises. For a confidential consultation on your estate matter, call (905) 695-1269 (toll-free at (877) 275-4792) or reach out online.

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