As we’ve discussed in a number of previous posts, home ownership is becoming increasingly expensive and, is therefore often undertaken through various complicated arrangements, including assistance from third parties (the parents of one of the spouses, for example), or utilizing the assets of only one spouse.
These complex arrangements generally become an issue upon breakdown of marriage when it comes time to engage in division of property. The legal concept of a “resulting trust” is one tool which is often utilised in order to make property division more equitable (i.e- fair) as between the parties, particularly where convoluted purchase arrangements were made.
What is a Resulting Trust?
In family law, a resulting trust is a remedy which allows married and unmarried spouses whose name is not on the title of a property to share in the value of that property, where it is equitable (i.e- fair) in the circumstances to do so.
Resulting trusts most commonly occur where both spouses contribute to the purchase price of a home, but the title is the name of one party only, or where one of the spouses contributes to the entire purchase price but title is in the other spouse’s name. In such situations, the law presumes that the parties intended that the property be shared. Resulting trust arguments have also been made, with varying degrees of success, with respect to other assets, such as RRSP’s or vehicles.
The reasoning behind the concept of a resulting trust is essentially that it would be unfair to deny the individual who financially contributed (wholly or partly) to a property some sort of interest in that property. Accordingly, under a resulting trust, the spouse who contributed to the property becomes the “beneficial interest holder” in that property, and the spouse who holds the legal title to the property becomes the trustee for the beneficial interest holder. Practically, this means that a husband who purchased a piece of property, such as a cottage, but then put the cottage in his wife’s name, remains the owner of that cottage. A resulting trust claim can be rebutted by establishing that the spouse holding legal title intended the property to be a gift. As such, the wife might be able to make an argument that the cottage was actually a gift, and that she is, in fact, the owner.
Resulting trust claims can be very complicated, and are best handled by a lawyer with significant experience with property division. At Jason P. Howie, we have more than 25 years of experience advising clients on complex property division matters. Contact us online or at 519.973.1500.