Documentation of a Gift

The recent case of McMurtry V McMurtry (2016 ONSC 2853) highlights the importance of proper documentation of a gift.

The wife of the deceased claimed that she was the owner of certain shares of a family corporation (worth several million dollars) that had belonged to her late husband.  She argued that the shares had passed to her as residuary beneficiary of the estate.  However, the son objected and alleged that the deceased had completed an inter vivo gift to him of the shares in question.  Therefore, the onus was on the son to prove that there was a gift of the shares.  This would entail rebutting:

1. The common law presumption in favour of bargains and against gifts, and
2. The related doctrine of resulting trust.

The court stated that, where a parent is alleged to have gratuitously transferred property to an adult child, the analysis required is as follows:

1. Begin with the presumption that the child holds the property on a resulting trust for the parent.
2. The adult child to whom the property was transferred has the onus of proving on a balance of probabilities that the parents’ intentions were to transfer the property as a gift.
3. All of the evidence must be weighed in an effort to determine the actual intention of the parent at the time of the transfer.

The corroborating evidence to refute the existence of a resulting trust can be direct or circumstantial. The Court found that the deceased did not make a gift of the shares to his son and as such the shares were included in the estate.

Litigation can be avoided through proper documentation of a gift.