Everyone is familiar with the concepts of gifts and gifting. Most people receive gifts and make gifts to others many times during the course of their lives. In addition, many persons make arrangements to gift their remaining assets when they die by leaving property to family members, friends or charities in a will.
A gift is the voluntary and gratuitous transfer of property from the person making the gift (the donor) to the person receiving the gift (the donee). In order for the transfer of a thing or an interest in land to be regarded legally as a gift, the donor must not receive any direct or indirect benefit in return for the transfer. (If a benefit of some kind is received, the transfer is likely to be considered a contract rather than a gift.)
In addition, the donee of the thing or property must be able to prove that the donor intended the transfer to be a gift. Under the common law there are a number of types of gifts. Important examples include:
Gifts Made on a Person’s ‘Deathbed’
Sometimes people make gifts literally on their ‘deathbed’. Gifts made in contemplation of death (or ‘donatio Mortis causa gifts’) are regarded as valid if each of the following requirements are met if there is:
- Unambiguous intent – The evidence must be clear that the donor intended to make a gift.
- Contemplation of death – The gift must have been motivated by the donor’s contemplation of inevitable (not just an expectation of) death.
- Delivery – full completion of delivery of the gift must be made.
- Completion on death – The completion of the transfer of ownership of the gift takes effect upon death of the donor. The gift is automatically reversed as soon as a donor who is certain of death makes a recovery.
As noted above, ‘testamentary’ gifts are made by a person’s last will and testament. Gifts made in wills are governed by the wording of the will and are only effective upon the will-maker’s death. A testamentary gift is also subject to the validity of the will and the legal requirements of the statute that governs wills and estates in the province where the will-maker died. In British Columbia, that statute is known as WESA (Wills, Estates and Succession Act, [SBC 2009] c. 13).
Gifts Made During a Person’s Lifetime
These are gifts that transfer ownership of money or things or interests in land between living people during the donor’s lifetime and are called by lawyers ‘inter vivos gifts’. This category of gift includes the vast majority of what most people consider to be a gift. Such gifts are considered to be valid if there is:
- Unambiguous Intent – The donor making the transfer must demonstrate full and clear intent to making the gift.
- Acceptance by Donee – The done must clearly accept the transfer of the property.
- Delivery – In order for the transfer to be complete, the donee must assume effective possession of the property or gift.
A Disputed Gift Case Study – the Snelling Decision
In the recent British Columbia Supreme Court case of Snelling v. Snelling 2019 BCSC 730, a father of three sons brought action against his estranged sons regarding a 50% interest in land that he had transferred to them many years before after the death of his first wife (the mother of his sons). He claimed that despite the transfer, he owned all of the land and not just the 50% interest he retained at the time of the original transfers to his sons and therefore he was entitled to all of the proceeds of the sale of the property which had been sold.
The issue in the Snelling case was whether all the requirements for an inter vivos gift were satisfied, and in particular whether ‘unambiguous intent’ to make a gift was proven. Ultimately the court said that intent was not established and consequently the sons held their interest in the property on a ‘resulting trust’ for their father.
Because the Snellings were not sophisticated in property transfer matters and the transfers had occurred almost 30 years ago, the sons were unable to present direct evidence of their father’s intention to make a gift (such as a signed declaration of gift). The father’s evidence at trial was that he made the transfers because he was concerned what might happen in the event of a divorce from a possible second wife.
The sons sought to prove that a gift was intended by their father by relying upon what they claimed was ‘indirect’ evidence of intention including an event where the father’s consented to the registration of a mortgage on the property at the request of one of his sons.
The Court held that this evidence was not ‘unambiguous’ and therefore insufficient to prove that the father irrevocably intended to gift the half interest in the property. Therefore he was entitled to all of the proceeds of sale.
What To Do If A Gift Is Disputed
Although the legal principles that apply to the analysis of whether a transfer of property is a gift may seem relatively straightforward, their application to the facts of a specific case requires an intensive analysis of the evidence available to either prove or disprove a gift. The interesting facts of the Snelling case demonstrate some of the complexities involved.
If you are in a dispute about a sizeable gift such as an interest in land, you should seek consult the property law lawyers at Mclarty Wolf. Call our experienced lawyers on 604-668-9542 or email us on our contact form.