Bjornson v. Mackinnon - Presumption of Resulting Trust

September is finally here, which means kids are starting a new year of school and things are finally cooling down.

In other words, it’s flannel season.
With the kids in school, Fall is always a good time to take stock of your assets and estate plan, and to make sure that you understand how, if your beneficiaries don’t agree, a court might look at your own estate plan. For example, the Honourable Justice Morley recently addressed the presumption of resulting trust in Bjornson v. Mackinnon, 2024 BCSC 1209.

In Pecore v. Pecore, 2007 SCC 17, the Supreme Court of Canada established the principle that, where a parent transfers ownership of an asset, whether that is a house, a bank account, or any other number of assets, to an adult, non-dependant child, the law presumes that the child is holding that asset in trust for the parent. That presumption can be rebutted with evidence that establishes that, at the time the transfer was made, the parent did so as an absolute gift. For example, and aging parent might add their adult child to a bank account to allow that adult child to help them manage their account and pay their expenses. When that parent dies, the money in that account does not flow automatically to that adult child. Instead, the law presumes that the money will be returned to the estate and distributed in accordance with that parent’s estate plan.

If, however, there is enough evidence to satisfy the court that in fact the parent meant to add their child to the account as a gift to them, and in fact intended for that child to receive the money in the account when they died, the presumption would be rebutted.

In Bjornson, the deceased mother had transferred investments totalling over $200,000 into a joint survivorship with her daughter shortly before her death. She had lived with that daughter for 20 years rent-free prior to her passing. This was, along with some other investments not challenged in the application, essentially her entire estate.

The deceased’s daughter took the position that when her mother died, these funds became hers by nature of the joint survivorship. The son of the deceased, who had had a difficult relationship with his mother due to substance abuse, took the position that, because of the presumption of a resulting trust, those funds should be returned to the estate and distributed accordingly. Justice Morley looked to the available evidence of the intentions of the deceased at the time of transfer. The daughter provided evidence that her mother had told her that she wanted the daughter to keep the money, while the son provided evidence that her mother told him the money would go to the daughter to protect him until he became sober, at which point the money would be shared.

Thankfully, the lawyer of the deceased had taken steps to create an evidentiary record. The lawyer advised the court that the deceased had told him that the transfer was done as an absolute gift, which was backed up by a memorandum the lawyer had drafted at the time as well as a draft Wills Variation Act declaration, all of which supported the daughter’s position.

Finding the lawyer’s evidence to be the most compelling, Justice Morley dismissed the brother’s claim.
The reality is that if the deceased had not seen a lawyer when transferring her assets, her daughter might have had to transfer half of those assets back to the estate for the benefit of her brother. The clear and convincing evidence also allowed the court to proceed by summary trial, saving both of her children thousands of dollars in court and legal fees.