Does Presumption Of Resulting Trust Apply To Benefit Plan Designations?

• Published date: 12 August 2020
• Subject Matter: Employment and HR, Family and Matrimonial, Employee Benefits & Compensation, Wills/ Intestacy/ Estate Planning
• Law Firm: Clark Wilson LLP
• Author: Ms Lauren Liang

The presumption of resulting trust is a well-known legal principle amongst estate lawyers. However, it may not be a familiar concept to many of the readers. The presumption of resulting trust was established in 2007 in the landmark Supreme Court of Canada Pecore decision. It applies typically in estate contexts when a parent gratuitously transfers his or her assets to an adult child. The court will presume that the child is holding the property in trust for the parent's estate, unless the child can prove that the transfer was intended to be a gift. In other words the child has the burden of proof to rebut the presumption of resulting trust if the child claims that the transfer was a gift.

The presumption of resulting trust often arises in situations where parents and adult children hold the parents' bank accounts or real properties in joint names. However, the courts in various provinces appear to have expanded this legal principle to benefit plan designations.

In British Columbia, the Wills, Estates and Succession Act ("WESA") allows for a beneficiary designation to be made in respect of any "benefit plan" that provides for a benefit payable on death. The term "benefit plan" is defined in WESA to include RRSPs, RRIFs, TFSAs, employee benefit plans, life or term annuities, etc. If a valid benefit plan designation is made, the benefit is payable to the designated beneficiary, and it does not form part of the participant's estate. However, a legally valid beneficiary designation may be subject to equitable claims including the claim of presumption of resulting trust.

The Ontario Superior Court of Justice recently ruled in Calmusky v. Calmusky that the sole named beneficiary of an RRIF was not the plan's ultimate beneficial owner. Instead, the Court held that the designated beneficiary was holding the RRIF in trust for the deceased's estate. In Calmusky, the father died in 2016 at the age of 94. He was survived by his twin sons, Gary Calmusky and Randy Calmusky. Shortly after his wife's death in 2014, the father made Gary the joint holder of his bank accounts (Gary resided with the father at the time, while Randy has been a resident of Alberta since the 1980s). The father also designated Gary as the beneficiary under his RRIF.

Randy applied to Court taking the position that Gary held the bank accounts and the RRIF in trust for their father's estate. Gary argued that he was entitled to the proceeds of the joint accounts by right of survivorship, and to the...