Monday, 29 May 2017

Transfers Between Spouses in Alberta Still Presumed Gifts

Author: Nathaniel Brenneis, Student-at-Law 

One individual transfers property over to another individual without receiving anything in return. In this situation, it is generally assumed that the individual receiving the property will hold the property in trust for the transferring individual who remains the beneficial owner. This is called the "presumption of resulting trust." It is up to the recipient of the property to rebut this presumption by proving that the transferred property was actually intended to be a gift.

There is a limited exception to the presumption of resulting trust called the "presumption of advancement." This presumption only arises in cases where the transfer is made from spouse to spouse or from parent to minor child. The principle provides that, absent evidence to the contrary, a gratuitous transfer of property between such parties will automatically be considered a gift.

The presumptions of advancement and resulting trust are both legal tools that assist in determining a transferor's intention at the time of a transfer. This is particularly important when a transferor has died and his or her intentions are being disputed. As a consequence, the presumptions can have a major impact on the division of assets as between spouses and beneficiaries. For example, they help determine whether jointly held property belongs to the surviving spouse or is divided up along with the rest of the deceased's estate.

There are members of the legal community, however, who question whether the presumption of resulting trust still applies between married couples in Alberta. The presumption of advancement between married partners has already been abolished across most of Canada, and many argue that contemporary social conditions no longer support its application. The presumption of advancement is largely based on the outdated understanding that most wives depend on their husband's financial support to survive. For obvious reasons, this sort of justification is no longer relevant in modern society.

Nonetheless, the Alberta legislature has yet to abolish the presumption of advancement. As a result, unless there is no evidence suggesting otherwise, transfers between Albertan spouses will still be presumed to be gifts. However, due to present social conditions, it is unlikely that a court would require a great deal of evidence to defeat this presumption when spouses are involved. In such a case, the transfer would be treated as a resulting trust.

So what does this mean? It means that any property that you transfer to or hold jointly with your spouse will likely be treated as a gift unless you explicitly express otherwise. If you do not intend for your spouse to be the beneficial owner of the property in question, it is important that you carefully record and document your true intentions and share them with both your spouse and beneficiaries.

Alternatively, for ways to ensure that your gifts are securely given to your loved ones, please see our blog post, Supporting Gifts and Property Transfers Down the Road.

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