As the “boomer generation” gets older, we have been told that we will see the largest transfer of wealth in history. We don’t have to wait for the future – it’s already here – some of that wealth transfer is happening right now. In family law cases, we are seeing older parents transfer some of their money/assets to their children, to allow them to buy houses, to send their children to university, or to set their children up with an ad hoc “retirement plan.” This usually happens by way of a gift, a loan, or by an “early inheritance.”

We also see transfers between spouses, or between a parent and a child, for different reasons. This is frequently the case with people who have professional or business interests that may see them want/need to protect their personal assets from potential business creditors. I know many lawyers and other professionals who have their homes placed in their spouses’ or children’s names.

There are the tax consequences and other liabilities of both kinds of transactions referenced above, and I am not going to discuss the taxation aspect of things, as it is beyond my scope – please, consult with a tax lawyer or an accountant for this information. Rather, I want to focus this blog on the issue of what happens in these situations where there is a family breakdown, and people start pointing fingers at who owns what, and under what circumstances (or reasons) was the transfer made. I also want to address when people ask for their gift to be returned, or for their loan to be repaid.

As with all my blogs, this is not a complete primer to the issues raised in the blog, but rather, it is to draw your attention to potentially troublesome and unintended situations that come when people breakup. I would like people to plan carefully and think ahead and be proactive, rather than be financially compromised and reactive. As the saying goes, “No good deed goes unpunished.”

Transfer of Property Between Parents and Children

When a family law (usually but not always marriage) sours, it is often the case that a parent who has transferred the property to their child are looking for it to be returned. This manifests itself by either the child whose relationship has broken down claiming they have a debt to repay to their parent, or the parent is brought in as a third party to the family law case to stake their claim to have the property returned.

As the court delves into that issue and looks at possible solutions, a judge will want to know exactly what the nature of transfer of property is. There are three common ways to do this:

  1. Gift;
  2. Loan; or,
  3. Early Inheritance.

There may be others, especially with more affluent families, including business/corporate transactions, but given the vast majority of my clientele, I am going to focus on the three methods mentioned above. The party who is looking to establish that the transfer should be classified as one of these three methods bears the onus of establishing same.

To prove that there has been a gift, one must establish:

  1. The person making the gift intended it to be gifted to the person receiving the gift, i.e., they gave it away, and did not expect it back, nor to receive anything for it;
  2. The person receiving the gift accepts the gift
  3. The gift must actually be transferred form the donor to the recipient.

If any of the elements of establishing a gift cannot be proven, then it will be up to a judge to determine whether it was a gift or not. The factual circumstances surrounding the transfer of property will help establish it was a gift, e.g., there’s little to no paperwork regarding the transfer, it was given to the recipient for a special occasion, there was no consideration (money, or something else of value) exchanged between the parties. Sometimes it is hard to prove a gift as you are trying to prove a negative, i.e., the absence of proper steps being taken. But in fact, by showing the lack of formality, this is often a feature of a gift.

To prove there has been a loan, it is almost the flip side of the gift. Loans usually have an agreement of some sort, either verbal or written, but preferably written. There are terms surrounding the loan, such as what was or how much was given, when, under what circumstances, legal representation, legal paperwork involved, the expectation to be repaid or the asset returned, any interest to be charged, what happens in case of default, etc. If a party can show some or all of these criteria, they can establish a loan.

From my experience, where people get into trouble is to try and “paper the file” on a retroactive basis, i.e., after the fact, to make it look like a loan, when it was really a gift at the time of transfer. This happens a lot in family law cases. That’s why if it is going to be loan, make it a proper business transaction, as if between arms’ length parties.

Finally, if the transaction is one where the transferring party is advancing an inheritance to a child, then much like a loan, there should be documentation about the transfer to verify this intention, as well as corresponding and coincidental estate documents, such as the person’s will, a trust document (or lack thereof), or some other documentation, to reflect that the person has received an advance of their inheritance and will not be entitled to a “double-dip” at the time the person who transferred the property passes away. As with the other cases, it is very much a fact-based situation, and depending on the probability of those facts that existed at the time of the transfer of property, one can establish the advance, or they simply cannot do so.

One final point on this issue – even though I am not giving tax advice whatsoever, the presence or absence of tax planning services, or tax liability, surrounding the transfer of the property will also be an indicator of whether the transfer was a gift, a loan or an advance on inheritance.

Transfer of Property Between Spouses

The other common circumstance that attracts a lot of family law attention is one property that is seemingly a shared asset between spouses is actually legally only in one party’s name.

It is settled law that a resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary (trusted person) or gave no value for the property, is under an obligation to return it to the original title owner.

Let me use a simple example: if a married husband and wife each contribute financially to the purchase of their home, but for tax planning or liability reduction reasons, they agreed to place title to the home solely in the name of the wife, then the law presumes that the wife is holding a resulting trust for the benefit of her husband, and that both of them should equally shared the value of the property.

Such resulting trusts have a rebuttable presumption. In plain language, this means that one spouse can be claim that there is no such trust, i.e. they can “rebut” the presumption that there is a trust, if it can be shown that the spouse in whose name the home is, i.e. who holds title to the property, received the property as an outright gift from the other spouse, and not as holding it for both spouses.

As with the other transfer or property issues above, resulting trusts are very fact specific. Consequentially, the same criteria referenced above apply to establish that such a transfer of property into one spouse’s name, as opposed to both spouse’s name, was intended to be either a trust or a gift. In essence, it is fact specific to the case. The more paperwork, formality, consultation with lawyers and financial planners, etc., are more likely to show that it was a trust. But the lack of these facts, as mentioned already, could give rise to an argument that it was a gift.

At some point, if such a case were to go to trial, a judge would apply common sense. Is it likely that spouse A made a gift of their home to spouse B, the value of which is $1,000,000.00, and that spouse A expected nothing in return and received nothing in return? This argument is often used for gifts of money – is it reasonable to accept that party A gave party B $100,000 and not expect it to be returned at some time? Maybe, but maybe not. It’s fact based!

One of the possible defences that could be used to rebut the presumption of a resulting trust is the common law principle of the presumption of advancement, which says the exact opposite of a resulting trust, i.e. that when property is transferred from spouse A to spouse B, it is considered to be a gift and the sole property of spouse B, and not a trust for spouse A. However, this presumption has generally been abolished by Ontario family property legislation (as provided for under the Family Law Act).

Court decisions in relation to rebutting the presumption of a resulting trusts is that, in gratuitous transfer situations, the actual intention of the grantor is the governing consideration. Where a gratuitous transfer is being challenged, the trial judge will commence their inquiry with the applicable presumption, and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention (see Pecore v. Pecore, and Kerr v. Baranow, which are two seminal cases in this area of law).

What About Non-Married Spouses?

The law of resulting trusts, and the other property division regime in the FLA, is for the exclusive use of the married spouses. For common law couples, to establish who owns what, they cannot avail themselves of net family property statements and equalization payments. Rather, they must rely on the common law concepts of unjust enrichment or joint family ventures. For the sake of simplicity, I am going to defer those issues to my next blog.

Why Are These Issues So Important?

The reason that these arguments happen are that it will impact the issue of property division between the parties. Again, in this context, I am referring solely to cases between married spouses. When each party calculates their net family property, they must establish their net worth (assets less debt) at the time of separation, then subtract their net worth (assets less debt) at the time of marriage, then subtract any applicable exclusions, to arrive at the net family property (NFP) value (I am very much oversimplifying this process, for the sake of keeping this blog short). Each spouse will have a NFP value, and the law in Ontario says the spouse with the higher NFP must transfer to the spouse with thew lower NFP value one-half of the difference between them.

If a party can show that certain assets were jointly held and not held only by one party, or that an asset was only loaned to them and it must be repaid, then you can see how spouses will try to manipulate the facts to either lower their NFP value, or raise their spouse’s NFP value, to limit their NFP exposure. In such cases, we are usually talking in the hundreds of thousands, if not more. The stakes are quite high.


As you can now appreciate, the facts surrounding the transfer, including the parties’ intentions surrounding the transfer, will dictate whether the person who transferred the property, as well as the person who received the property, expected it remain given away, to be returned, or to be held in trust. Paperwork and events that were properly documented will go a long to establish the formality of the situation, and the more likelihood that the property as to be returned or held in trust, whereas the lack of formality may be used to show that it was to be gifted.

It is therefore extremely important to both make and keep notes of such transactions, to make your position and intentions known to your spouse or your children, and to have these conversations before things get dicey and difficult. It is why such sayings as “an ounce of preventions is worth a pound of cure” are still so relevant today – a little bit of time and money to document your intended transfer will save you from spending a small fortune in time and money later.

Remember, every case is unique, just like you are. If you are facing real legal problems, you need the right legal solutions. Please contact Runco Law at 289-799-3080 or email me at