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The Presumption of Resulting Trust In The Context Of Beneficiary Designations

The Presumption is that The Court of Appeal Will Have To Weigh In

Often, as a parent ages, he or she may add an adult child to their bank accounts as joint holders to assist them with their banking, out of convenience.

Most of the time this doesn’t lead to issues when the parent passes away.  Some of the time it does however.  In some cases, the adult child, who now holds the joint account alone in his or her name following their parent’s passing, may say that the parent intended him to receive the proceeds of the bank account upon the parent’s death as, for example, a “thank you” for all the work they performed to assist the parent.

Other beneficiaries of the Estate may disagree and say that the intention was only for the adult child on the joint account to assist the parent, but the money was not to go to the one adult child following their parent’s death.

These types of disagreements have led to a concept at law called a “presumption of resulting trust” which assumes that where property is held in one party’s name, because he or she is a fiduciary, or gave no value for the property, he or she is obligated to return it to the original owner.  The leading case on this point is the Supreme Court of Canada case Pecore v. Pecore, 2007 SCC 17.

In other words, if the adult child did not contribute any of the funds to the joint account, but now holds all the money, the court starts with the presumption that the money should be returned to the Estate, rather than be kept by the adult child.  The onus then shifts to the adult child to provide sufficient evidence to overcome this presumption in order to keep the money, or else the court will order the return of the funds to the Estate.

Two recent, conflicting, decisions by lower court judges in respect of how the presumption of a resulting trust should (or should not) be applied in the specific context of beneficiary designations, will likely require clarification from the Court Appeal to settle this issue.

In Calmusky v. Calmusky1 Justice Lococo concluded that a presumption of resulting trust should be applied in the context of beneficiary designations under a Registered Investment Fund (“RIF”), or an insurance policy, just like it is applied in the context of joint bank accounts.   He saw no basis for applying the presumption of resulting trust to the gratuitous transfer of bank accounts into joint names, but not applying the same presumption to an RIF beneficiary designation.2 He found that in both cases the same evidentiary issue arose — the difficulty in determining the transferor’s intention at the time he transferred legal (as opposed to beneficial) entitlement to the RIF.

However, in the more recent case of Mak (Estate) v. Mak,3 Justice McKelvey has explicitly declined to follow Calmusky v. Calmusky.  In contrast to Justice Lococo’s conclusion that naming a designated beneficiary in a RIF or insurance policy was the same as adding someone to a joint account, Justice McKelvey concluded that the designation of a beneficiary of a RRIF is akin to a testamentary disposition. In other words, he concluded that deciding who should be named as a beneficiary in a RIF or insurance policy is the same as when a person decides who he or she wishes to leave assets to in their will.

Justice McKelvey then went on to consider how this conclusion impacted the presumption of resulting trust, stating:

[44] In my view, however, there is good reason to doubt the conclusion that the doctrine of resulting trust applies to a beneficiary designation. First, the presumption in Pecore applies to inter vivos gifts. This was a significant factor for the Court of Appeal in Seguin, and similarly is a significant difference in the context of a resulting trust. Further, the decision of this Court in Calmusky has been the subject of some critical comment. As noted by Demetre Vasilounis in an article entitled “A Presumptive Peril: The Law of Beneficiary Designations is Now in Flux”, the decision in Calmusky is, “ruffling some feathers among banks, financial advisors and estate planning lawyers in Ontario”. In his article, the author comments that there is usually no need to determine “intent” behind this designation, as this kind of beneficiary designation is supported by legislation including in Part III of the Succession Law Reform Act (the “SLRA”). Subsection 51(1) of the SLRA states that an individual may designate a beneficiary of a “plan” (including a RIF, pursuant to subsection 54.1(1) of the SLRA.)


[47] I have therefore concluded that the Pecore presumption of a resulting trust does not apply to a beneficiary designation for the mother’s RRIF. Like the situation with the presumption of undue influence, the onus is on the plaintiffs to establish that the Mother’s intention was to benefit her estate with the beneficiary designation. Having failed to do so I have concluded that the plaintiffs have failed to establish an entitlement to the proceeds of the RIFF.

In our view, Justice McKelvey’s rationale seems to be the more compelling one.  Selecting a beneficiary to receive the proceeds of investments or life insurance after you are deceased is quite different from adding someone to your joint bank accounts.  In the former scenario, you are making decisions, just as you would under a will.  You are selecting specific people to whom you wish to leave something.  There are very limited potential alternate purposes as to why you would designate a person to be a beneficiary.

Just as it is not presumed by the court that a specific bequest made to someone in a will was really intended to be shared equally by all the other named beneficiaries, such a presumption should similarly not apply when a specific beneficiary is selected under a RIF or life insurance policy.

Other parties still have the ability to argue that those designations should be overturned (on the basis of undue influence, lack of capacity or other grounds), but the onus lies  with the challenging party to prove this.

In contrast, the gratuitous transfer of a joint bank account is affected by the doctrine of survivorship (which simply means that when something is held jointly, it automatically passes to the surviving party).  This is quite different than specifically designating someone to be your beneficiary under a RIF or insurance policy.

Further, and as noted above, the reasons why you might add an adult child to a bank account while you are alive can vary widely.  It is more typical that a parent simply wants someone to assist them, although in certain circumstances it could be their intention to give that child the entirety of their account.  Given these conflicting intentions, it is far more reasonable for a presumption of resulting trust to be applied in these circumstances.

However, in light of the conflicting case law, it will likely be up to the Court of Appeal to provide some clarity on this issue.

  1.   2020 ONSC 1506 (S.C.J.)
  2.   Calmusky v. Calmusky at para. 56
  3.   2021 ONSC 4415(S.C.J.)

The author of this blog is Bradley Phillips. Bradley is a partner at Wagner Sidlofsky LLP. This Toronto office is a boutique litigation law firm whose practice is focused on estate and commercial litigation.

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This blog is not intended to serve as a comprehensive treatment of the topic. It is not meant to be legal advice. Every case turns on its specific facts and it would be a mistake for the reader of this blog to conclude how it might impact on the reader’s case. Nothing replaces retaining a qualified, competent lawyer, well versed in this niche area of practice and getting some good legal advice.
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