April 21, 2026
Some time ago, we explained the legal concept of the resulting trust, and the presumption of resulting trust, which Canadian courts apply to help tell whether a transfer of property or money is a gift or is intended to keep an interest in the property, called a beneficial interest, for the person giving the property away.
The presumption simplifies the process of decision making where the transferor has died. It also addresses the difficulty created by the human tendency to give verbal evidence that supports their current position, which may not really reflect the facts at the time of the transfer.
A follow-up article discussed circumstances where the presumption was rebutted, and the transfer was held to be a gift. This is not shocking, as both the leading cases on resulting trusts decided at the Supreme Court of Canada ended up finding that a gift was intended. For example, in the leading Supreme Court decision in Nishi v. Rascal Trucking Ltd., the presumption was rebutted largely because of the wording of a fax describing the payment as “without any conditions or requirements”.
THE ISSUE
When does the presumption of resulting trust apply?
THE CASE
In a recent decision, Lalli v. Lalli, the Ontario Court of Appeal gave a surprising spin to the presumption of resulting trust. The Court of Appeal examines the situations in which a resulting trust may arise and says that the presumption only applies where the person who transferred the property is deceased, thus unable to give evidence. In cases where the transferor is alive, the court says, the decision should simply be made like in any other situation, based on the judge weighing the conflicting evidence and deciding on the balance of probabilities.
In other words, there is no presumption in those situations.
This is not something which the Supreme Court of Canada has ever said. In fact, it seems contrary to what the Supreme Court says in Nishi – one Court of Appeal judge makes that point in his dissenting opinion disagreeing with the majority decision.
It will be interesting to see whether this case goes to the Supreme Court, and if so, what they say about the presumption.
Until then, we have a few suggestions about what you should know if you are making a gift or transfer of property or money or are intending to create a trust.
TAKEAWAYS
- Until then, it is more important than ever to make your intentions clear when you give or transfer property (including money) to others.
- Because judges are aware that verbal evidence may be self-serving, they give little weight to what people say was their intention.
- This makes it extremely important to document in writing the transferor’s intention at the time of the transfer or payment.
- Written evidence will also be particularly important if either party is deceased.
- Evidence of others involved in the transfer, such as lawyers or accountants, will also be considered, and given more weight than what the parties themselves have to say.
- The court will look at how the assets were treated after the transfer- control of funds; use of property; payment of taxes; payment of a mortgage; payment for upkeeping.
- But the best evidence is a legally prepared, signed and witnessed document, such as a “letter of gift” (often required by mortgage lenders to prove that the buyers’ downpayment is not a debt) or a declaration of trust.
- Caution must be taken with joint bank accounts – the bank documents need to be read carefully to see whether they match your intentions.
HOW WEILERS LLP CAN HELP YOU
We can be your trusted advisors on estate planning and real estate issues. We will work with you and your financial advisors to avoid unintended results.
If you find yourself in a lawsuit over property or an estate, the experienced litigation team at Weilers LLP may be the right lawyers for you.