Estate Dispute involving Home Ownership

A recent Court of Appeal decision considers a subject often encountered in estate litigation disputes—assets held jointly between a parent and a child.

In Mroz v. Mroz (2015 Ont. C.A.), an aging mother transferred title to her home to herself and her daughter as joint tenants. The home was the mother’s only significant asset. The mother then went on to leave a Will which made various bequests to family members, some of which were charged against the family home. The Court was therefore asked to consider whether the home was to pass to the daughter by right of survivorship (i.e., gifted to her outright) or whether it was an asset of the estate to be distributed in accordance with the mother’s Will.

The trial judge concluded that the 2004 Will made the daughter a joint tenant of the property on the condition that she pay out the bequests referred to in the Will. According to Justice Gillese of the Court of Appeal, the trial judge erred in her approach.

Justice Gillese found that the transfer to the daughter invoked the presumption of a resulting trust pursuant to the Supreme Court’s decision in Pecore v. Pecore, (2007 S.C.C.). In other words, the starting presumption is that the house was part of the mother’s estate. The burden of proving otherwise rested with the daughter. Once the trial judge found that the home was to be used as the source of the payment of the bequests, it was not possible to also conclude that a gift of the home to the daughter was intended. In other words, it could not be the case that the mother gifted the home to the daughter because this result would be irreconcilable with the mother’s Will.

The decision illustrates the importance of the evidence associated with the transferor’s intention at the time of transfer. In this case, the mother’s intention was inferred from post-transfer events; i.e., her execution of a will which contained terms inconsistent with a gift of her house to the daughter by survivorship. Had the mother transferred title to her home after signing her will, perhaps a gift of the house may have been assumed. Clearly, it is important to document one’s intentions with respect to a transfer of title so that there is no guessing in the event a dispute arises.

Thanks for reading,

Jason

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