Was it a Gift or a Loan? How Ontario Courts Decide
When a family member gives money away during their lifetime, confusion can arise after they pass away: did they intend it as a gift, freely given, or as a loan that should be repaid to their estate? The recent case of McCorkell v. Roos, 2025 ONSC 6432 provides a clear example of how Ontario courts decide.
This case also shows why it’s so important to document transfers and understand how the law treats them.
What Happened in McCorkell v. Roos?
This case was about Irene Lavendure, who had three children: Karen, Stewart, and Darryl. After she was diagnosed with terminal cancer in 2022, Karen helped manage her mother’s finances under a power of attorney. Later, after Irene’s death in 2023, Karen oversaw Irene’s estate as Estate Trustee.
A dispute arose over $22,000 that Irene had given to her son Stewart in 2010. Stewart claimed the money was a gift. Karen and Darryl argued it was a loan that should be repaid to the estate. The court had to decide what the money really was.
How Does Ontario Law Treat Lifetime Transfers?
In Ontario, when someone gives money without a formal agreement, the law assumes it is not a gift. This is called the presumption of resulting trust. Here’s how it works:
The money is presumed to still belong to the donor (or their estate).
The recipient must prove it was a gift.
The donor’s intention at the time of the transfer is what matters.
This is especially important if the donor has passed away and can’t testify about their intent. The person claiming the gift has the burden to prove it.
How Did the Court Decide?
The Court looked at several key factors in this case:
1. Documentation Matters
Stewart claimed the money was a gift made by cheque with the word “gift” written on it. But he didn’t provide a copy of that cheque or show attempts to get one. Without this proof, the claim of a gift was weakend.
2. Family Testimony Counts
Karen and Darryl explained that Irene intended the $22,000 to be repaid when Stewart could afford it. Irene typically distributed money equally, and she hadn’t given similar amounts to the other children. This supported the loan argument.
3. Actions Can Speak Louder Than Words
Stewart later transferred a boat to Darryl as “repayment,” which suggested he recognized the money was something to be repaid.
4. Handwritten Notes Can Help
Irene had a notebook with a note that Stewart owed $22,000. The court found this supported the loan claim.
5. Video Recordings Can Backfire
Stewart had video-recorded conversations with Irene while she was in hospital. The court found these recordings didn’t clearly show the money was a gift, and also criticized Stewart’s decision to record a potentially vulnerable parent.
What Was the Court’s Conclusion?
After reviewing the evidence, the court decided:
Stewart did not prove the money was a gift.
The $22,000 was therefore determined to be a loan owed to Irene’s estate.
Lessons for Families
How can I avoid disputes like this?
Write it down. Clearly mark money as a gift or a loan.
Keep records. Cheques, emails, and bank statements can help.
Be consistent. Treat similar situations the same way with all family members.
What if there’s no written record?
Courts will consider all evidence, including family testimony, behavior, and past practices. But without clear documentation, disputes are harder to resolve.
Do I need a lawyer?
Even with good intentions, giving money without guidance can lead to disputes and legal costs. If you are considering gifting or loaning money to a family member, getting advice helps ensure that your true intentions are clear and respected.
Lifetime transfers are becoming increasingly common. Many parents provide their children with an “early inheritance” to help with major expenses, such as purchasing a first home. However, these transfers are also a leading cause of estate disputes. Understanding the difference between a gift and a loan (and documenting it properly) can help families avoid confusion and costly litigation down the road.
If you have any questions about lifetime gifts or if you would like to discuss your estate plan, please contact us to schedule 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.
