Case Update: Dyjack v Shaw - Who pays the price?
The recent Ontario Superior Court decision in Dyjack v Shaw, 2025 ONSC 1937 highlights the importance of considering who should be responsible for debts and taxes when drafting your will. It also highlights how essential it is to seek professional advice when making estate planning decisions—especially when those decisions involve cross-border assets.
In this case, the deceased had gifted a Florida property to one of her daughters in 2009 by transferring the property from her sole name into joint names with her daughter. Under U.S. law, a Gift Tax was payable on the transfer at the time, but the deceased did not notify the IRS or pay the tax. When she passed away in 2021, both of her daughters— who were appointed as co-executors and beneficiaries—discovered the outstanding tax liability.
The key question became: who was responsible for paying the tax? Was it the daughter who received the Florida property, or was it a liability of the estate, meaning both daughters would have to share the burden equally?
Ultimately, the court decided that the Gift Tax was payable by the estate, requiring both daughters to contribute equally.
While we can't know for certain what the deceased intended when she drafted her will, it seems unlikely that she meant for her daughters to end up in court over the issue, incurring significant legal costs in the process.
There were at least two opportunities for this situation to be avoided:
At the time of the property transfer in 2009 – If the deceased had received legal and tax advice before putting the Florida property into joint names, she would likely have been made aware of the U.S. Gift Tax implications and could have taken appropriate steps to report and pay the tax, avoiding complications down the road.
When preparing her will in 2013 – The will-making process should have prompted a review of any prior estate planning transactions, including the 2009 transfer. A qualified estate planning professional should have asked about the transfer and whether proper legal and tax advice had been obtained. This would have provided an opportunity to address the outstanding tax liability or clearly express who should be responsible for it.
Dyjack v Shaw is a cautionary tale that reminds us estate planning is about more than just dividing assets—it's about minimizing conflict, ensuring clarity, and avoiding unnecessary costs for your loved ones. Whether you're transferring property, gifting assets, or drafting a will, it's vital to seek professional guidance. A well-crafted estate plan can protect your legacy and spare your family the stress of litigation during an already difficult time.
If you have any questions about your estate planning, please contact us to arrange a consultation.
This blog post is for informational purposes only and is not intended to provide legal advice. If you require legal assistance, before taking any action you should contact us or another qualified lawyer to discuss your situation.
