( Disponible en anglais seulement )
The Ontario Court of Appeal decision in Foley v. McIntyre is an interesting and helpful discussion of the presumption of resulting trust in the context of joint accounts held between parents and their adult children. The presumption of resulting trust has been applied by the Courts to negate the application of the right of survivorship in joint tenancies by deeming adult children to be holding joint accounts in trust for the parent. This is an important and often contentious issue that must be considered by both individuals and estate planners in developing and implementing an estate plan.
The appeal was made by Donald Foley (“Donald”), following the dismissal of his action to set aside three inter vivos monetary transfers and a testamentary bequest of Canada Savings Bonds made by his father, Edward Foley (“Edward”), to his sister, Dorothy McIntyre (“Dorothy”). The Court of Appeal dismissed his appeal and upheld the trial judge’s holdings of the validity of the monetary transfers and the bequest to the respondent.
With respect to the monetary transfers made by Edward during his lifetime, the Court of Appeal found no reason to interfere with the trial judge’s findings that the transfers were valid, since: (a) Edward did not lack capacity when the transfers were made, (b) the presumption of resulting trust was rebutted in respect of the gifts made by Edward to Dorothy because it was clear from the facts that Edward’s intention was to make a gift to Dorothy, and (c) Edward was not unduly influenced by Dorothy.
The Court of Appeal then discussed the disposition of the Canada Savings Bonds. The bonds were specifically bequeathed to Dorothy in Edward’s last Will and Testament but prior to his death, Edward deposited the bonds into an account held by Edward, Donald and Dorothy, as joint tenants with the right of survivorship.
Donald argued that (a) the specific gift of the bonds was revoked when they were deposited into a joint account and (b) that the trial judge erred in finding that the presumption of resulting trust had not been rebutted. Dorothy submitted that Donald did not provide sufficient evidence that the presumption of resulting trust in respect of the joint account had been rebutted and further that there was evidence confirming that the bonds could only be deposited into the registered holder’s account (and not the joint account).
Ultimately the Court of Appeal held that (a) Donald and Dorothy held the joint account (which held the bonds) on resulting trust for Edward, (b) the bonds had not matured at the time of his death, and (c) the bonds remained registered “in Edward’s name only”. Therefore, the Court of Appeal concluded that the bonds passed to Dorothy pursuant to the specific bequest in Edward’s last Will and Testament and not based on the right of survivorship applicable to the joint account.
This case reinforces the established legal framework of the presumption of resulting trusts arising in circumstances of gratuitous transfers from parents to their adult children. Further, the Court of Appeal provide a clear rejection of the argument that a transfer made purposefully to reduce/avoid probate fees is not enough to rebut such presumption. Finally, this case serves as a warning to individuals and estate planning professionals to ensure that care is taken in structuring how assets are held and whether deposits and other transfers during one’s lifetime are consistent with their ultimate testamentary intentions.
If you would like further information regarding this decision, the presumption of resulting trust or the effect of transferring asset into joint names, please feel free to contact the author.