Paying for Dad’s Funeral: Is it a Gift? Or a Loan?

In the recent decision of M.J. Dixon Construction Ltd. v. Dixon (2011 ONSC 2430) John Dixon, a son of the deceased sought reimbursement to his company for expenses paid for his father’s funeral. The deceased. Michael Dixon Sr. passed away in February 2005.

During his lifetime Michael Dixon Sr. founded M.J. Dixon Construction Ltd. While he was still alive, Michael Dixon Sr’s son John took over the company, in spite of John’s long-standing estrangement from his family.

After Michael Dixon’s Sr.’s death, arrangements were made for his funeral and John agreed with his mother and siblings that the company would pay for the cost of the funeral. A little over a year after Michael Dixon Sr.’s death, John’s mother Patricia Dixon, passed away. John’s siblings David Dixon and Susan Alarie were named executors of their mother’s estate.

In this action, John claimed that he had only paid the funeral costs because no one else in the family could at the time, and that his mother had promised him she would reimburse the company once she received her husband’s life insurance proceeds. The evidence demonstrated that John had not pursued payment from his mother during her lifetime. It also emerged that after their mother died, John and his siblings learned that their mother had signed a codicil to her will removing John’s entitlement to the family cottage. John’s siblings all testified that they indeed had had the financial means to pay for the funeral, but that John had agreed the company would pay for the funeral nevertheless. The evidence of John’s siblings was also that the funeral – which cost more than $30,000.00 – was more lavish than they would have arranged, and had been so arranged to reflect the deceased’s success as a businessman.

In reviewing the evidence, Justice Corrick found that John Dixon had indeed intended to pay for the funeral as a gift and only later changed his mind when he discovered that he was not to receive a share of the family cottage pursuant to his mother’s will. As a result, the payment of funeral expenses was a gift from John’s company, and not a loan that could be claimed from his mother’s estate.

This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

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