What is a Beneficial Interest?

A beneficial interest is a term used to describe the situation that occurs when something is held in “trust”. You may have a beneficial interest in something if you are the “real” owner of it, but legally it is “held” by someone else. For example,

Benny is 80 years old. Benny buys this house with money that he’s saved up over the years:

The house is in Vancouver, so it is worth a lot of money. Benny and his daughter Tracy are worried about what will happen when Benny dies. Tracy does not make a lot of money so she would not be able to pay the probate fees on the value of the house. So Benny and Tracy talk to a lawyer who tells them to put the house in joint names. That way, if something happens to Benny, Tracy will automatically take ownership of the house.

So Benny and Tracy go to the land title office and tell them that it should be put in joint names. Legally (on paper) the house is 1/2 Benny’s and 1/2 Tracy’s. But Benny doesn’t actually want Tracy to be the owner of the house until he dies. He paid for the whole house. Tracy didn’t pay anything. Although legally (on paper) Tracy owns 1/2 of the house, she is actually holding her 1/2 in trust for Benny.

Benny has a beneficial interest in the house.

Beneficial interest is not always a simple matter. The key is the intention of the transferor (or person giving legal title to someone else) at the time of the transfer. If Benny had intended to give Tracy her 1/2 interest in the house when they went to the land title office, then Tracy would not be a trustee, and Benny would not be a beneficiary. Instead, they would each be full owners of 1/2 of the house.

Often, there is no evidence about what Benny intended. For example, Benny might have died before anyone questioned what Benny wanted back when they were at the land title office. Where that is the case, the court looks to “presumptions” to help them decide what Benny wanted. In cases where Benny has a legal duty to care for the person he gives it to, the court will presume that he intended to give full ownership to Tracy. This presumption applies to spouses and minor or disabled children only. If Benny gives it to an adult child or a legal stranger (someone to whom he owes no duty), then the court presumes a trust, that he keeps his beneficial interest.

Therefore, the whole thing could turn on how old Tracy was when they went to the land title office. If Tracy is a minor, and Benny cannot or does not give evidence about his intention, the court will presume a full and final gift and Tracy will be entitled to 1/2 of the house. If Tracy is an adult, and similarly Benny cannot or does not give evidence about his intention, the court will presume a trust and that Benny retains a beneficial interest in the house, and Tracy holds her 1/2 in trust.

At Richter Trial Lawyers, our estate lawyers have dealt with cases like Benny and Tracy’s. Sometimes the goal is to bring the house into the estate so it may be redistributed under WESA and a wills variation action. Other times, it is used in family law to argue that it is family property which ought to be divided. If you or someone you know has a spouse or parent who transferred property out of their name and you believe they have a beneficial interest, call us at 604-264-5550 for a free claim evaluation.