A trust is an arrangement in which property is transferred from one person to a second person who agrees to hold it for the benefit of a third person. Persons can play dual roles with respect to the functioning of the trust in certain situations. Inter vivos trusts can be set up in a document called a “deed of trust” and is activated while the person setting up the trust (i.e. the person who transfers the property known as the settlor) is still alive. These type of trusts get their name from the Latin words meaning “between the living” and are often used by people to acquire an income tax advantage through the pre-death disbursement of property.
Although the law allows for the existence of many different kinds of trust—such as written, unwritten, express, implied, revocable, irrevocable and so on—a degree of certainty is generally required in order for the establishment of the trust to be recognized both practically and legally. Furthermore, the trust must be absolutely clear in the following three ways:
1. It must be certain from the words in the trust document, or by some other evidentiary means, that the settlor (or a testator where the trust is established by a will) clearly intends to transfer the legal ownership in the property to the trustee and the beneficial ownership to the beneficiary.
2. It must be certain and clear from the words in the trust document, or some other evidentiary means, exactly what property is being transferred to the trustee.
3. It must be certain and clear from the words of the trust document or again, by some other evidentiary means, who the beneficiary or beneficiaries of the trust are.
Obviously, the evidentiary burden of establishing the existence of a valid trust is best satisfied by having a written deed of trust.
In Willis v. Willis Estate, 2006 CanLII 9145 (ON SC), George Albert Willis and F. Marie Willis transferred real property to their son, Harold Willis (“Harold”), on January 21, 1997. The transferee was described on the deed to be “Harold Willis In Trust”. The words “In Trust” became a source of conflict between the parties and resulted in the Application at hand. F. Marie died after the transfers. Harold Willis died on July 12, 2003.
It is agreed that no valid trust was created by the Instrument registered against title to the property, given that there was no certainty of the object of the trust. At issue in the Application was whether the transferors, George Albert and F. Marie Willis, intended to create a trust, which because it failed, would mean that the property reverts back to them, or their survivors. In contrast, if the transferors intended a transfer of the property to Harold, in fee simple, the property forms part of Harold’s Estate.
To determine the issue, the intention of George A. Willis and F. Marie Willis had to, as much as possible, be ascertained. The court looked at the circumstances surrounding the transfer, George A. Willis’ will instructions and history of relations between George A. Willis and F. Marie Willis and their three children and their spouses. The non-existence of a trust document, nor any evidence of such document ever having been considered by George Albert and F. Marie Willis or prepared by their solicitor was also duly noted by the court.
After having considered the limited evidence available, some of which was contradictory, the court came to the conclusion that the intention to create a trust had not been established by the applicant. On a balance of probabilities, other than the words, “In Trust,” which appear on both the Transfer and the Affidavit of Residence and of Value of the Consideration, there is no evidence whatsoever to show that George Albert and F. Marie meant to convey to Harold anything less than the fee simple, that is outright ownership of the property.
The court reinforced the premise that there must be a clear intention to create a trust and that there is insufficient evidence to establish such intention. It was therefore declared that the land is owned in fee simple by Harold Willis and therefore forms part of his estate.
For assistance in establishing or administering a trust, please contact Andrea Kelly.
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Andrea Kelly, Lawyer, has extensive experience in wills, trusts, powers of attorney and estate administration matters. She provides clients with a high standard of timely professionalism and expertise, incorporating a very thorough fact finding process. This is quite often enlightening for her clients and facilitates individually tailored services. If you would like to know more, feel free to use the easy contact form or read Andrea’s bio.
