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Friday, November 21, 2014

When "strong bonds of love and devotion" fall apart: Sask Court considers action to set aside gratuitous gift of land from elderly parent to adult child

Justice Schwann of the Court of Queen's Bench for Saskatchewan opened her recent decision in a farm estate case as follows: "At issue in this case are the legal ramifications flowing from a gratuitous gift of land from an elderly parent to an adult child, and the parent's subsequent desire to revoke that gift."  An elderly mother transferred a joint tenancy interest in the family farm to her stepson shortly before she left to live in an assisted living home, but a year later brought a court action to have the transfer set aside.  She died a few years after that before the action was decided - it was continued by her estate.  Upon the mother's death, the farm passed to the stepson as the surviving joint tenant.

Several grounds for setting aside the original transfer were proposed to the Court: 1) undue influence of the stepson over the mother; 2) the absence of independent legal advice; 3) breach of fiduciary relationship; 4) failure of consideration; and, 5) presumption of resulting trust.

Justice Schwann determined that the mother had gifted the interest in her farm property by exercise of free will - she was not unduly influenced by her stepson.  She also found that the mother had not received adequate independent legal advice about the transfer, but this was not in and of itself a reason to overturn the gift.  Justice Schwann did not find that the lack of independent legal advice meant that the stepson had dominated the mother's free will.  She also found that there was no fiduciary relationship, that no consideration (i.e. quid pro quo) was required for the gift, and that no resulting trust was established.  The action by the estate was dismissed in its entirety.

Read the decision at: Thorsteinson v Olson.