- Where intention is absent or unclear in a transaction between an ageing parent and an adult child, the presumption of advancement may operate to impute an intention that it was a gift.
- In an era where the problem of elder financial abuse is significant, this may warrant review and the Canadian approach is worth considering.
Gifts from elderly parents – why age should matter
Financial abuse is the most prevalent form of elder abuse after psychological abuse (Australian Law Reform Commission, Elder Abuse – A National Legal Response Final Report, Report No 131 (2017) 19). While the law provides remedies for financial abuse, an older person is usually no better placed to avail themselves of these remedies than they were to prevent or protect themselves against the abuse in the first place. This is particularly the case in transactions between an ageing parent and their adult children, where arrangements are often informal and based on trust. Ironically, it is to these transactions that the presumption of advancement applies. The presumption of advancement operates to impute an intention, where it is absent or unclear, on parties in certain relationships, such as parent and child (and between a husband and wife), that a gratuitous transaction between them was a gift. This leaves the ageing parent, who may have since lost capacity, with the onerous burden of proving that the arrangement was not a gift and that the property or contribution towards the acquisition of the property is held for them in resulting trust. In a society where ageing parents are becoming increasingly more dependent on their children for care and assistance, it may be time to rethink the application of the presumption of advancement.
The source/nature of the problem
An increase in life expectancy (due to various factors including increased knowledge of health care and advancements in medical science) has resulted in an increase in the number of people living with ‘age related’ disabilities (ALRC Report, 18, 205). In order to manage, a growing number of parents are entering into arrangements with their children that involve the conferral of a significant benefit on the child. The most common examples include the contribution of funds (usually the proceeds of sale of the parent’s home and only asset) towards the purchase of a property in the adult child’s name or the construction of a granny flat or extension on a property owned by the adult child.