We have previously blogged about recent Ontario decisions regarding the possible expansion of the law of presumptions of resulting trust to assets for which a designated beneficiary has been named.

The leading case on the issue of presumptions of resulting trust and their application to situations in which property is gratuitously transferred to an adult child remains the Supreme Court of Canada’s decision in Pecore v Pecore.  Recently, we have seen case law revisiting the Pecore principles and exploring scenarios to which they may or may not apply.  Last year, the Calmusky v Calmusky decision interpreted the principles set out in Pecore in a novel way to see a presumption of resulting trust applied in the case of a RIF for which a beneficiary designation, benefitting an adult child, was in place.  Since then, the Mak Estate v Mak decision reconsidered such a scenario and found that a presumption of resulting trust should not apply to assets for which a beneficiary is designated.

Now, a new decision from Nova Scotia revisits this issue again.  In Estate of Fitzgerald v Fitzgerald, 2021 NSSC, an estate trustee sought a declaration that the proceeds of a TFSA for which the respondent, an adult daughter of the deceased, was the designated beneficiary were held in trust for the estate, relying on the interpretation of Pecore applied in the Calmusky decision.  The deceased had left a will naming one of his sons as estate trustee and his eight adult children as equal residuary beneficiaries.  While most of the deceased’s children had moved away after completing high school, the respondent remained in her hometown of Sydney, Nova Scotia, where her father resided.  The deceased and the respondent held a joint bank account, which the respondent agreed was an asset of the estate.  However, she took the position that her father intended that she receive the benefit of his TFSA as its designated beneficiary and that the presumption of resulting trust did not apply.

Justice Murray reviewed the law of presumptions of resulting trust in Nova Scotia and in other Canadian provinces and then the facts of this matter in detail, suggesting that “all of the circumstances must be weighed and considered in making this decision.”  After quoting Justice Lococo in Calmusky, Justice Murray disagreed that the presumption of resulting trust should apply in such circumstances: “With respect, I see things differently. There are several reasons why the same reasoning should not apply to TFSAs (as opposed to a joint account), starting with the fact that a TFSA is not held jointly, nor is it transferred inter vivos during the transferor’s lifetime. Instead, it is transferred upon his or her death.”  The other reasons reviewed by Justice Murray can be summarizes as follows:

• The beneficiary designation is a contract that binds the institution where the funds are held, with legislation that not only requires the funds to be paid to the person designated but also entitles that person to receive the funds;
• There is no access to the funds by the designated beneficiary prior to death;
• The designated beneficiary is not a fiduciary; and
• A beneficiary designation is akin to a testamentary document.

Ultimately, the Court found that the deceased’s intention to benefit the respondent with the TFSA could not be any clearer and that the presumption of resulting trust did not apply to the TFSA in any event.

As we head into a new year, it will be interesting to see how further case law may follow Mak and Fitzgerald in continuing to clarify the circumstances in which a presumption of resulting trust will be imposed.

Thank you for reading,

Nick