Author: Joel Franz
Parents who transfer land or
personal property to their children often do so with little or nothing in
writing to document the transfer. Many would wonder why anything beyond the
requisite conveyancing documents or simple transfer of possession would be
necessary. Due to the historical nature of gifts, and how they are treated by
the Courts, they can often be challenged by other parties, such as
disenfranchised (or less enfranchised) siblings and family members. For the
purposes of this blog, the parent is the party giving the gift, and the child
is the one receiving the gift. However, the comments below apply equally to
other parties, whether they are relatives, friends, or complete strangers.
Very simply, the law presumes
“bargains” and not gifts. Where there is a gift, the onus is on the child to
prove that the gift was (1) delivered, (2) accepted, and (3) the parent
intended the gift. There is usually no issue with requirements one and two, and
the dispute usually resolves around intention. This is usually complicated by
the fact that when the gift is disputed, the parent has either passed away, or
is incapacitated. Therefore, people need to look elsewhere for evidence of the
parent’s intention.
Those challenging a gifts
generally do so on the basis that the parent didn’t intend to actually effect a
gift. The law is often on their side, as the person who received the gift
usually bears the burden of proving intention. Those who have received gifts
are often put in the difficult and uncomfortable position of proving that it
was intentional. Further, they can be accused by others of unduly influencing
the parent.
There are several ways to
document the intention of the parties at the time the gift is transferred. For
larger gifts, particularly transfers of land, the parent should always receive
independent legal advice. Further, the parties can put their understanding in
writing, which is always more valuable than word of mouth. Independent legal
advice can be used to rebut a contention of undue influence, and is often the only
practical way of doing so, particularly if the parent has passed away. For
smaller gifts, getting the intention in writing is one practical solution. Getting mom or dad to write their intention of passing on an heirloom
piece of jewellery, or a collectible car, is particularly useful should a
family challenge the gift years later. Whatever you do, insuring the transfer
is documented further than simply words spoken is key in assuring that the gift
will stand years later, if challenged.
