Trezzi v. Trezzi: Can You Gift Assets You Do Not Own?

In the Canadian case Trezzi v. Trezzi, the Ontario Court of Appeal upheld a gift made to beneficiaries under a will even though the assets were owned by a corporation and not by the deceased. Under this new precedent, testamentary gifts that have failed in the past may now be valid. 

In Trezzi, the deceased was the sole shareholder of company Trezzi Construction Inc. In his will, the deceased gifted assets that were owned by the corporation to his son. “The gifts were challenged by other family members on the basis that the assets being gifted were not owned by the deceased, but were owned by Trezzi Construction, which is a separate legal entity from the deceased shareholder.” 

The issue was whether the deceased had could gift these assets even though he did not personally own them. Per usual, the application judge “looked at the surrounding circumstances to determine the deceased’s intent.” While also looking at the provisions of the will, the judge found that the deceased could bequeath the assets to his son. 

Other family members appealed this decision, sending the case to the Court of Appeal, which ultimately upheld the application judge’s decision.

The Court held that the proper process is to look at the deceased’s “subjective intentions as reflected in his will.” 

It was clear that the deceased intended to “wind-up” Trezzi Construction by transferring all of its assets to his son, even though the winding-up was not directly expressed in the will. 

Further. Moreover, as a matter of general powers under corporate law, “shareholders of a corporation may, by special resolution, require the corporation to be wound up voluntarily.” 

As the sole shareholder of the corporation, the deceased has the corporate authority to make such a transfer while he was alive. “On his death, this authority devolved to the executors of his estate and, therefore, the executors could wind-up Trezzi Construction and dispose of the assets as intended.”

The Court of Appeal stated that it would be “preferable for the will to explicitly refer to the executor’s authority to deal with the assets of Trezzi Construction,” but nonetheless held that the language of the will implied this intention. 

See Brian Radnoff & Sahar Cadili, Trezzi v. Trezzi: Can You Gift Assets You Do Not Own? , Dickinson Wright LLP: All Things Canada Blog, November 10, 2020. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.