Parent to Child Transfers: Gift or Resulting Trust?

Abstract

This article considers the question of how the law should treat voluntary transfers of property from aging parents to their children. Such transfers are increasingly common in our society and may be part of an informal family agreement in which the children agree to provide and care for their aging parent. In most states, voluntary transfers of land are treated as gifts, and the parent must turn to the doctrines of undue influence or unconscientious dealing to overturn the transaction. However, if the parent pays the purchase price for land put in the child's name, the presumption of advancement can be rebutted, and the property will be held on resulting trust for the parent. The difference in the law's treatment of these transactions is considered, and it is concluded that the law in relation to voluntary transfers requires reform. Various options for reform are canvassed, and it is proposed that Australia should adopt recent Canadian changes in which voluntary transfers of property from a parent to an adult child are considered to presumptively raise a trust in the parent's favour.

Keywords: trust structure, gift, transfer of property, resulting trust, parent, child, transfer

JEL Classification: K10, K19, K00, K11, K39