Written by Tristen Audet & Paige Watson

It has become an increasingly common occurrence for parents to provide adult children with additional funds to help the adult child purchase their first home. It has also become an increasingly common occurrence that the classification of these funds has become a hotly debated topic in litigation, including divorce disputes and – as in the recent case of Silva v Valadao (2025 ONSC 2414) – estate litigation. 

In this case, the Applicant provided funds to his son, without contemporaneous documentation of whether such funds were intended to be a gift or a loan. The son purchased a property with his wife, taking title as “joint tenants.” Upon the son’s untimely death, the surviving spouse became the sole owner of the property, by the legal principal of the “right of survivorship”. The deceased son’s father then commenced litigation against the surviving spouse.

In law, a joint tenant does not “dispose” or “part with” their asset upon death; their interest is instead extinguished, leaving nothing to transfer or part with. It is for this reason that assets which pass to a surviving joint tenant by a right of survivorship are not available to creditors of the deceased owner’s estate.

In Silva, the Applicant sought a Certificate of Pending Litigation against title to the property, claiming an interest in land having arisen from his contribution of funds to the purchase price. This claim was advanced, in part, because there were no assets of the son to claim against, and by the right of survivorship, the son’s interest in the home had never been part of the son’s estate.

The Court in Silva found that, while the Applicant had not met the test for a Certificate of Pending Litigation (a “CPL”), the facts of the case were such that there existed a triable issue as to whether the gratuitous transfer of funds constituted a gift or a loan to the son and his wife when they purchased the property. Because such funds were gifted and used for the purchase of the property, an argument could be made that they attach to the property and all owners, by the principal of a “purchase money resulting trust.” Because the question before the Court was a question of whether to issue a CPL, there was not a determination on the success, if any, of such claim.

What the case of Silva tells us though is that it is not only family law proceedings that must grapple with gratuitous transfers. When a child who has been gifted funds dies unexpectedly, the Court is then faced with both the difficulty of looking at the “reality of the situation” through the lens of family law disputes but must also contend with the provisions of the Evidence Act, which requires corroborating evidence outside of the affidavit of the claiming party.

Parents who do not intend to provide gratuitous transfers to children should consider the following:

1. Contemporaneous documentation is the best offence against allegations that an advance was a “gift”;
2. The law sets out that even where a purchase money resulting trust exists, a non-spouse who has contributed to the purchase price only (e.g Makes no mortgage payments, utility payments, or provides assistance to upkeep expenses.), is only entitled to be refunded their contribution, plus basic interest;
3. The Court looks unfavourably upon demands that only arise after a matrimonial dispute has commenced;
4. The Court has imputed intention on parties based on how the parent has treated other children’s advances; and
5. A validly drafted loan agreement may still be forgiven upon the death of the parent, as either a gift or a set-off against the child’s inheritance.

If you’ve made a gift to your children and want to consider your options, contact a member of the KMB Law’s Business and Estate Succession team.

This article is provided for general information purposes and should not be considered a legal opinion. Clients are advised to obtain legal advice on their specific situations.

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