Are you looking for help with a resulting trust in British Columbia? Many people think that siblings suing each other over an estate are family law, but it’s not. It’s part of estate law.

In our exploration of estate law in British Columbia, one concept worth delving into is “Resulting Trusts”. At its core, a resulting trust is a legal term that refers to a situation where the legal title of the property is transferred, but the recipient (trustee) is under an obligation to return it to the original owner (the settlor) or to follow specific instructions regarding its use.

To understand the intricacies of resulting trusts, it’s crucial to appreciate the fundamental principles of trusts themselves. A trust is a legal relationship that is established when one individual (the settlor) gives another individual (the trustee) the responsibility to manage certain assets for the benefit of a third party (the beneficiary).

Transfer of responsibility entails legal ownership

This transfer of responsibility entails legal ownership passing to the trustee, but beneficial ownership remains with the beneficiary. A resulting trust emerges when the transfer of assets doesn’t align with the presumed intention of the parties involved, and the law imposes a trust back on the person who provided the assets.

A classic scenario leading to a resulting trust might be where a father purchases a home but places it under his daughter’s name. If the father later claims that the house should be returned to him, it might be concluded that a resulting trust was intended, with the daughter being the trustee of the property for the benefit of the father.

However, the situation isn’t always this straightforward. Sometimes, the courts have to discern whether a resulting trust exists based on the conduct and verbal exchanges between the parties involved.

Left the property in the care of another

Under BC Estate Law, resulting trusts are particularly significant when disputes arise about the distribution of an estate after a person’s death. For instance, if a person left the property in the care of another with the understanding that the recipient would distribute it according to the deceased’s wishes, a resulting trust might be found to exist. If the recipient doesn’t fulfill this obligation, legal action could be taken to ensure the property is handled as intended.

Another compelling scenario pertains to joint bank accounts. In many cases, elderly parents may add an adult child to their bank account for convenience or to aid in managing their finances. If the parent passes away, the question might arise whether the remaining funds are to be shared with other siblings or wholly owned by the joint account holder.

Presume a resulting trust

Here, courts often presume a resulting trust, implying the joint account holder holds the funds in trust for the estate to be distributed according to the parent’s will unless there’s clear evidence the parent intended to gift the balance of the account to the joint holder.

Moreover, resulting trusts play a crucial role in circumstances where gifts are given in contemplation of death, also known as “donatio mortis causa”. In such situations, if the giver survives or if the gift was not delivered with the clear intent of transferring ownership, a resulting trust could be imposed to return the property to the original owner or their estate.

Yet, the law around resulting trusts in BC is not as cut-and-dry as it may seem. Courts must look at several factors to determine whether a resulting trust exists. The ‘presumption of resulting trust’ principle acts as a starting point, but it can be rebutted by demonstrating the contrary intention, i.e., that the transfer was intended as an outright gift. This usually requires compelling evidence, such as documentation or credible testimony.

Resulting Trusts In Estate Law

Furthermore, in certain situations, BC courts apply the ‘presumption of advancement’. This concept counters the presumption of resulting trust and assumes that a gift was intended when the transfer is made from a parent to a minor child, or from a husband to a wife, though the latter is less commonly applied now due to societal changes towards gender equality.

The concept of the executor or personal representative for an estate is one that has the potential to cause problems. In estate administration situations, an individual may have two roles; executor or personal representative of the deceased (distributing inheritances, paying taxes, etc,) and then a beneficiary of the estate.

If you need to speak to an estate lawyer, use our find a lawyer service.

In amicable estate administrations, this dual role usually does not cause problems but in some cases, especially where disgruntled siblings or second spouses are involved, the dual role has the potential to create conflict. Especially during litigation between one or more of the beneficiaries.

Determine the beneficial interest

The concept of resulting trust is frequently utilized in family law cases to identify property ownership when there is ambiguity about its original owner.

The main objective of a resulting trust is to determine the beneficial interest of the transferee when the property is transferred without any explicit intentions of ownership. This is often the case when a person purchases a property but the title is in someone else’s name. In such situations, the transferee is presumed to have a beneficial interest in the property.

Resulting trust can be employed in family law cases to establish property ownership and divide the property into divorce or separation cases. In situations where a property is titled in one spouse’s name but the other spouse has contributed to the purchase or maintenance of the property, resulting trust can play a crucial role in determining ownership.

For example, if a husband buys a property but the wife is responsible for the mortgage, renovations, and upkeep of the property, the wife may have a claim to the property under the resulting trust.

Gift the property to the transferee

It is important to note that the presumption of resulting trust can be challenged by providing evidence that shows the transferor intended to gift the property to the transferee. For instance, in the above example, if the husband proves that he intended to gift the property to his wife, then the wife would be considered the owner of the property.

Resulting trust is also important in common-law relationships, which are becoming increasingly common in Canada. According to Statistics Canada, the number of common-law couples in Canada has risen from 145,000 in 1981 to 1,980,000 in 2016.

In such relationships, property division can be particularly complicated, especially when the title of a property is in one partner’s name. The resulting trust can be used to establish the ownership of property in such cases and determine the beneficial interest of the transferee.

Resulting trust is a vital legal concept in family law cases that can be used to identify property ownership and divide property when couples separate or divorce. While it can be a complicated process, resulting trust plays a crucial role in ensuring that property is divided fairly and equitably.

Beneficiary alleges a resulting trust

A resulting trust is where the property is transferred to someone who pays nothing for it and then is implied to be holding the property for the benefit of another person or the estate as a whole. In a situation where one beneficiary alleges a resulting trust, they are attempting to recover this property on behalf of the estate as a whole, not in their personal capacity as a beneficiary.

As it is the estate as a whole that benefits from the recovery of property from a person who did not pay for it.

When an individual is allegedly holding property in trust and is also the executor there is a real conflict. There is legislation in British Columbia that recognizes this inherent conflict and provides a practical solution (s. 151 of the Wills, Estates, and Succession Act.) The case law surroundings. 151 is not well developed as there have been few decisions regarding it.

Resulting Trusts In BC

In a recent Supreme Court of British Columbia decision named Terezakis v. Ekins, 2018 BCSC 249, it was successfully argued before Madame Justice Morellato that the application of s. 151 was relevant.

The client was the son of the deceased and a one-third beneficiary of the estate along with his two siblings with whom he shared an acrimonious relationship. In the process of administering the estate, the client alleged that his sister, the executor, had been gifted property outside of the estate without consideration and that this property should be returned to the estate on a resulting trust.

Technically the client did not have the standing to bring the claim against his sister for resulting trust because it was the estate itself that had the cause of action against her. As the sister had been named executor she was unlikely to sue herself.

Application of Section 151

That is where s. 151 comes in: by allowing a beneficiary or successor, with leave of the court, to commence proceedings in the name and on behalf of the personal representative or executor of the deceased person. These proceedings would aim to recover property that could normally only be recovered by the personal representative.

The court will grant leave if the beneficiary has made reasonable efforts to cause the executor to commence the action, and has given the executor notice. Further, it must also be shown that the beneficiary (in this case the client, the son) is acting in good faith and that it is “necessary or expedient” for the proceeding to be brought.

If those factors are met the Court may authorize a person to control the conduct of a proceeding as if that party were the executor or personal representative of the deceased for the purposes of the lawsuit only.

Resulting Trusts In Estate Law

In Terezakis v. Ekins, 2018 BCSC 249, the other party argued that the client was not acting in good faith and that the proceeding for resulting trust was not “necessary or expedient”. Madame Justice Morellato rejected both these assertions.

Madame Justice Morellato agreed that the language of s. 151 required a direction from the Court that the claim would be brought by the estate against the sister, the executor, and that the client could have carriage of the action for resulting trust.

Resulting from the decision by Madam Justice Morellato the lawsuit now reads: “Angela Hrysoula Terezakis, in her capacity as executrix of the Estate of Aikaterini Terezakis v. Angela Hrysoula Terezakis” – i.e. Ms. Terezakis is suing herself. The practical reality is that Ms. Terezakis is not suing herself at all; the applicable legislation and the Courts have intervened in a way to allow the client to proceed against his sister on behalf of the estate as a whole.

This case may have practical consequences on estate litigation in British Columbia as a whole. The prevalence of these types of conflicts within estate administration and the consequent litigation is very common. Luckily for the client, the drafters of the Wills, Estates, and Succession Act had crafted practical legislation and our learned judges are implementing the law in an appropriate manner.

We hope you found this article on resulting trusts in estate law helpful.