Many parents transfer property to their children during their lifetime with the best of intentions. Sometimes these transfers are part of estate planning. Sometimes they are made in recognition of caregiving or family support. In other cases, they are intended to simplify future administration of an estate.
However, when an elderly or vulnerable person transfers property to a family member for little or no consideration, courts may closely examine the circumstances surrounding the transaction.
The Newfoundland and Labrador Supreme Court's decision in O'Keefe v. O'Keefe, 2025 NLSC 85 serves as a powerful reminder that lifetime property transfers can be challenged and, in some circumstances, set aside.
The Property Transfer
The dispute involved an elderly mother who transferred her home to one of her sons and his spouse for stated consideration of $1.
Although the deed referred to nominal consideration, everyone agreed that no money was actually paid for the property.
The mother passed away only months after the transfer.
Following her death, other family members challenged the transaction, arguing that the transfer should be set aside because of undue influence and resulting trust principles.
The Court ultimately agreed.
Caregiving Relationships Can Create Legal Risks
One of the most significant aspects of the decision was the role played by the caregiving relationship.
The son and his spouse lived with the mother and assisted her with many aspects of daily life, including:
- Transportation;
- Medical appointments;
- Medication management;
- Food preparation;
- Shopping; and
- Day-to-day support.
While caregiving is often undertaken out of genuine love and concern, it can also create circumstances where one person becomes highly dependent on another.
When that dependency exists, courts may become concerned about whether a transfer was truly voluntary.
What Is Undue Influence?
Undue influence does not require threats or obvious coercion.
Instead, the legal issue is whether the transfer resulted from the dominant influence of another person rather than the free and independent decision of the transferor.
Courts recognize that vulnerable individuals may be susceptible to influence from people on whom they depend.
As a result, in certain relationships, a presumption of undue influence may arise.
When that happens, the person benefiting from the transaction may have to prove that the transfer resulted from the transferor's own fully informed and independent decision.
Independent Legal Advice Is Not Just a Formality
Many people assume that if a lawyer was involved in a transaction, the transfer is automatically protected from challenge.
The decision demonstrates that things are not always so straightforward.
The Court carefully examined the circumstances surrounding the legal advice that was provided.
Among the concerns identified were:
- The beneficiary's involvement in arranging the legal work;
- The beneficiary's presence during discussions with the lawyer;
- The lawyer's lack of investigation into alternative arrangements;
- The absence of meaningful discussion regarding other family members; and
- The failure to fully explore the consequences of the transfer.
The lesson is clear: independent legal advice must be genuinely independent.
Simply signing documents in a lawyer's office may not be enough if the surrounding circumstances raise concerns.
Understanding the Document Is Not Always Enough
The Court accepted that the mother understood she was signing a deed transferring her home.
However, that did not end the analysis.
A person may understand that they are signing a document without fully appreciating:
- The impact on their estate;
- The effect on other beneficiaries;
- Alternative ways of achieving their goals; or
- The risks associated with the transaction.
Estate litigation often focuses on this distinction.
Understanding the mechanics of a transaction is not necessarily the same as understanding its broader consequences.
The Presumption of Resulting Trust
The Court also relied on another important legal principle known as the presumption of resulting trust.
Where a person transfers property to another without receiving meaningful consideration, the law may presume that the recipient holds the property for the benefit of the transferor unless a genuine gift was intended.
Importantly, transfers from parents to adult children do not automatically qualify as gifts.
The person receiving the property may be required to prove that the parent truly intended to give the property away.
In this case, the Court concluded that the evidence was insufficient to establish such an intention.
Estate Planning Lessons
This decision highlights several practical issues that frequently arise in estate disputes.
Document Intentions Clearly
If a property transfer is intended to be a gift, that intention should be carefully documented.
Obtain Independent Legal Advice
The transferor should receive advice independent of the family member benefiting from the transaction.
Consider Alternatives
Depending on the circumstances, a will, trust, life estate, or other planning tool may accomplish the same objective with less risk.
Address Family Expectations
Unexpected transfers frequently create disputes among siblings and beneficiaries.
Consider Capacity and Vulnerability
The older or more dependent the transferor becomes, the greater the need for careful planning and documentation.
The Bottom Line
O'Keefe v. O'Keefe demonstrates that courts will closely examine property transfers involving elderly and dependent individuals, particularly where family caregivers benefit from the transaction. Even where a transferor appears to understand that they are signing a deed, the court may still conclude that the transfer should be set aside if concerns exist regarding undue influence, independence, or gifting intentions.
The decision serves as an important reminder that lifetime transfers should be approached with the same level of care and planning as a will.
MerGen Law is Here to Help You
At MerGen Law, we assist clients throughout Alberta with estate planning, property transfer disputes, undue influence claims, resulting trust claims, will challenges, estate administration, and estate litigation. Whether you are planning a transfer of assets during your lifetime or challenging a disputed transaction after a loved one's death, we are here to help.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about wills and estates should seek professional advice tailored to their specific circumstances.