Elderly Relatives in Trouble? Here's what may help...

By: Danna Fichtenbaum, Wills and Estates Lawyer

Click here to see this article featured in the Minden Brief 2020 Winter Newsletter.

Today’s rapidly aging population, combined with what feels like busier schedules, is prompting adult children to seek assistance from third parties with the care of their elderly parents or relatives.

Professional care is a necessary reality for some and, in most cases, can be just what the doctor ordered. However, in some cases, trusted caregivers manipulate, coerce, or even abuse the very people whom they are hired to protect. What can be done when caregivers receive, unjustifiably, property from those for whom they are caring?

It is important to be aware of not only the harm – or potential for harm – that may come to your loved one, but also how you can address it. Estates are becoming increasingly valuable and complex and, therefore, litigious. With that comes increased scrutiny of those who may be blamed for an elderly person’s diminished assets. This is not a bad thing.

There are certain legal principles available to confront unlawful behaviour of caregivers, including the presumption of resulting trust, the presumption of known incapacity, the presumption of undue influence, and the doctrine of equitable fraud.

Presumption of Resulting Trust

When title of a property is in one person’s name, despite that person giving nothing in exchange for it, the recipient must prove the transfer was intended as a gift if the transfer is challenged (except in limited circumstances, such as a transfer of property from a parent to a minor child).^[1] This is called a rebuttable presumption of resulting trust, where the Court presumes the recipient is holding the property for the benefit of the transferor in trust. If the recipient of the gratuitous transfer cannot rebut the presumption by proving that the transfer was intended as a gift, the recipient is required to return the property.

Presumption of Known Incapacity

The presumption of known incapacity applies when the assets of someone whose property is under guardianship gives property to another person. In that case, the Court presumes that the recipient knew of the lack of capacity of the transferor. The recipient must prove that he or she did not have reasonable grounds to believe the transferor was incapable.^[2]

If the recipient proves that they did not have reasonable grounds to believe the transfer was unreasonable, the presumption of known incapacity will be rebutted, and the gift will stand. Otherwise – if the recipient cannot prove there was a reasonable basis to believe the transferor was capable of gifting – the property must be returned.

Presumption of Undue Influence

Undue influence occurs where a decision is made as a result of one party’s exertion of influence over another, leading to a decision that contradicts the influenced party’s actual intention. The circumstances surrounding certain inter vivos​​​​​ gifts (i.e., gifts during one’s life) can give rise to either actual or presumed undue influence.

Actual undue influence exists when a gift is secured by unacceptable means (e.g., coercion).

Presumed undue influence exists when the relationship between the transferor and recipient is in some way “special,” such as the relationship between an elderly person (who is vulnerable because of age, illness, or cognitive decline, etc.) and his or her caregiver. The courts will intervene as a matter of public policy to prevent abuse of the influence existing from such “special” relationships. Proof of reprehensible conduct is not necessary.

If the requisite type of dependent relationship exists, and the potential for domination is found, the court will consider the nature of the transaction itself. Once the presumption is established, the obligation shifts to the recipient to prove a lack of such influence.

Doctrine of Equitable Fraud

The doctrine of equitable fraud applies if the nature or effect of a gift itself offends the conscience of the court, even if there is no undue influence (or dishonest conduct). This doctrine also depends on a relationship based on vulnerability but does not require the recipient to dominate the transferor. Instead, it concerns conduct that, in the context of the relationship of the parties, is unconscionable. The transactions captured by this doctrine need not be deceitful. In fact, the Court has described this fraud as “transactions falling short of deceit but where the Court is of the opinion that it is unconscientious for a person to avail himself of the advantage obtained.”^[3]

The above are some of the mechanisms available to correct improper behaviour as it relates to the more vulnerable members of our society. Though at times difficult to navigate, these mechanisms are ultimately in place to ensure justice is achieved. If you believe misconduct has taken place, we recommend speaking with a legal advisor to discuss your options.

If you have any questions about the possible manipulation or coercion of a loved one in an estate matter, contact Danna Fichtenbaum at dfichtenbaum@mindengross.com.