The law is suspicious of gifts. After all, who gives away property to strangers for free? Thus, when a person transfers property to another without receiving payment, it is generally presumed that the transferor did not intend to gift that property, but that the recipient accepted the property to hold in trust for the transferor. This is called the “presumption of resulting trust”. In legal terms, while the transferee accepted legal title, the beneficial interest in the property remained with the transferor. This presumption can be rebutted if the transferee proves that the transferor intended to make a gift.
Of course, not everyone is a stranger. Historically, when a parent transferred property to his or her child or spouse without receiving payment, the law presumed that a gift was intended. This is called “the presumption of advancement”. This presumption could be rebutted if the transferor proved that they did not intend to make a gift. However, in 2007, the Supreme Court of Canada made changes to the presumption of advancement to better reflect modern customs and family arrangements. Now, when a parent transfers property to an adult child without payment, the presumption of advancement does not apply. But what happens when the transfer occurred before 2007?