Property Transfer Disputes
Understanding the ramifications of a property transfer
In 2011, Marian Hertendy, as sole owner of her house in Smiths Falls, drafted a Will which left the house to her daughter, Beverly Ann Gault. In 2012, Marian transferred her ownership interest in the property to Beverly for nothing in return. This property transfer was done on the basis that Marian would retain a life interest in the property, and that Beverly and her husband would help pay for on-going expenses.
In 2017, after a falling out, Marian removed Beverly from her Will and brought a claim against Beverly, seeking a declaration that Beverly held the property on a resulting trust. Marian’s claim was based on, among other things, the following arguments:
- She did not know the legal effect of the transfer;
- The lawyer who signed the transfer was not acting for Marian, but rather, was acting for Beverly;
- She did not receive independent legal advice;
- The transfer occurred while Beverly was her attorney for property;
- She was depressed when the transfer was complete; and
- She was on heavy pain medication following her knee surgery.
The Court confirmed that, “an adult child who received a gratuitous transfer of assets from her parent bore the burden of rebutting the presumption of a resulting trust by showing on a balance of probabilities that a gift was intended.” Simply, it was up to Beverly to prove that, at the time of the transfer, Marian intended to transfer the property to her as a gift.
In the above case, Hertendy v Gault, the Court found that Marian, in transferring the property, intended it as a gift because:
- She signed the transfer document;
- She intended to sign the document;
- She received a benefit from signing the document; and
- She paid the lawyer for the transfer.
Marian’s claim was dismissed, and the transfer was upheld. Regardless of her Will, when Marian dies, Beverly will get the house.
While we listed some of the factors the Court will look at in the case of a property transfer dispute, it is not an exhaustive list, and one single factor will not be determinative. The question of whether a gift was intended will be a very fact-specific question and the Court will balance all the evidence. A property transfer can be beneficial, in certain circumstances, but you must make sure that you fully understand the ramifications of doing so. If you plan to transfer property as part of your estate plan or if you have a property transfer dispute, contact our Estate Litigation Team at Merovitz Potechin LLP.
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