Woman's estate plan goes awry as third party lays claim to property

Woman's estate plan goes awry as third party lays claim to property

Woman

A recent 2018 court decision in the British Columbia Supreme Court highlights the risk of registering a joint tenancy as part of one’s early estate-planning efforts, especially when one party is not informed.

The case, Gully v. Gully, involves a piece of real property to which Ms. Gully had added her son, Steven, as a joint owner on title. “Steven had made no contribution to the acquisition or maintenance of the Residence and was not aware that his mother had executed the transfer of ownership,” wrote Aubrie Girou of Alexander Holburn Beaudin + Lang.

It was accepted as fact that Ms. Gully had made the transfer as part of an estate plan that included a 2015 will. In the will, Ms. Gully declared that she contemplated naming Steven and other individuals as joint owners of some of her assets, or designated beneficiaries of her RRSP, insurance, and other investments.

“It [is] my intention that upon my death, such to belong to the named beneficiary, at law and in equity, and that such are not to be shared or allocated to other persons,” the 2015 will said.

But in 2017, Steven and his company consented to judgment in favour of a third-party creditor, Ledcor. The court accepted that at this point, he was still unaware that he was on title to his mother’s residence. Ledcor subsequently registered its judgment against his half-interest to the residence.

Shortly after Ledcor’s move, Ms. Gully executed a new 2017 will that severed the joint tenancy and left nothing to Steven. She then applied to the court for, among other things, a declaration that Steven held his half-interest in the residence on resulting trust in her favour. “Ms. Gully argued that the 2015 transfer had been made to facilitate the transfer of the Residence to her grandchildren on her death and that the beneficial interest remained solely with her by way of resulting trust,” Girou wrote.

Rejecting Ms. Gully’s argument, the court held that the 2017 will was executed in direct response to Ledcor’s registration of its judgment. Referring to the actual transfer made in 2015 and the intention according to the 2015 will, the court determined that she had intended to give Steven her half of the residence, and that the gift occurred at the date of the transfer from sole ownership to joint ownership.

The court also noted that “the presumption of resulting trust that may arise through the gratuitous transfer of an interest in land from a parent to a child has no application in the case of a third party creditor claiming against a registered interest in land.” In other words, even if the 2015 transfer had created a resulting trust, Ledcor’s claim would not have been affected.

“The fact that Steven had not agreed to the transfer of the Residence and, in fact, did not have knowledge of the transfer, did not invalidate the registered joint tenancy interest,” the court decided.

 

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