Our top rated* BC Family Parental Loans Or Gifts lawyers see an increasing number of parental loan or gift disputes coming before the BC courts. Wealthy baby boomers want to help their children in a variety of ways. BC Family Parental Loans Or Gifts need to be in writing to avoid disputes years after the fact.
Unfortunately, family members often do things on trust without getting a family lawyer to properly document whether money given to a couple is a loan, an investment or a gift to one or both of the spouses. Failure to document what the nature of the generosity was is a prescription for disaster. If you have a question concerning BC Family Parental Loans Or Gifts click here to meet with us.
MacLean Law has Western Canada’s largest Mandarin and Cantonese fluent high net worth family law team and we note our Chinese families often get into problems in this area.
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Lorne N. MacLean, QC founder of MacLean Law’s multi award winning team of BC Family Parental Loans Or Gifts summarizes a new case that gives you a great synopsis of how BC Family Parental Loans Or Gifts work in BC.
BC Family Parental Loans Or Gifts – What Was The Intention At The time?
The first thing a court must do is look at the intention at the time the money was advanced NOT WHAT someone says there intention was years later in hindsight. Obviously, a written loan or gift document, a mortgage or a promissory note would make things easy but what if there is nothing in writing?
C.S v K.S.S provides a step by step approach to solving BC Family Parental Loans Or Gifts disputes.
[119] Should these gratuitous advances be considered as loans or gifts? This question is to be determined by reference to the intention of the person who made the advance, at the time of the advance: Cabezas v. Maxim, 2016 BCCA 82, para. 41.
[120] The Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17, reviewed the law relating to the presumption of advancement and the presumption of resulting trust as applied to gratuitous advances of money between family members, and held that although the presumption of advancement applies between parents and their minor children, that is not the case in respect of adult children. The presumptions are a guide for resolving disputes where evidence of the transferor’s intent is unavailable or unpersuasive.
[121] The presumption of resulting trust was explained at para. 24 of Pecore:
24 The presumption of resulting trust is a rebuttable presumption of law and general rule that applies to gratuitous transfers. When a transfer is challenged, the presumption allocates the legal burden of proof. Thus, where a transfer is made for no consideration, the onus is placed on the transferee to demonstrate that a gift was intended: see Waters’ Law of Trusts, at p. 375, and E. E. Gillese and M. Milczynski, The Law of Trusts (2nd ed. 2005), at p. 110. This is so because equity presumes bargains, not gifts.
[122] This approach was adopted by our Court of Appeal in Beaverstock v. Beaverstock, 2011 BCCA 413 at para. 9:
[9] The correct approach to the resolution of this dispute is not in dispute. It is set out in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. Whether the transfer was a loan or a gift depends on the actual intention of the appellant when she made the advance, which is a question of fact. As the advance was gratuitous, the onus was on the respondent to demonstrate that the appellant intended a gift, since equity presumes bargains, not gifts (para. 24). This equitable principle gives rise to a presumption the son received the money on a resulting trust, which is a rebuttable presumption of law. The trial judge was therefore required to presume the advance was not a gift and to determine whether the respondent had satisfied the burden of rebutting the presumption of resulting trust on a balance of probabilities (para. 44).
BC Family Parental Loans Or Gifts – Factors Used To Decide What The Monies Advanced Were?
[123] As the presumptions are rebuttable, one must still consider the facts of each case. A useful list of relevant factors was set out in Locke v. Locke, 2000 BCSC 1300 at para. 20:
1. whether there were any contemporaneous documents evidencing a loan;
2. whether the manner for repayment is specified;
3. whether there is security held for the loan;
4. whether there are advances to one child and not others, or advances of unequal amounts to various children;
5. whether there has been any demand for payment before the separation of the parties;
6. whether there has been any partial repayment; and
7. whether there was any expectation, or likelihood, of repayment.
This list of factors was referred to by our Court of appeal in Kuo v. Chu, 2009 BCCA 405, at para. 9.
BC Family Parental Loans Or Gifts – Lack Of Documentations Is Always Bad
[124] In the present case, there is no contemporaneous documentation evidencing a loan with respect to any of the pre-separation advances, although the claimant has referred to subsequent documentation of many of them. There was no manner of repayment specified at the time of the advances, nor was any security taken. There is no evidence of advances to other children. There have been a few subsequent demands for repayment, but some of them came after the date of separation.
[125] The evidence is somewhat confusing as to whether there has been any partial repayment. As set out above, on September 9, 2003, Ms. S. sent a telegraphic transfer of $136,500 to her father in China. It might be contended that this amounted to repayment of the advances in July 1997 from her aunt and her uncle. However, the transfer from Ms. S. in September 2003 was not to either her aunt or her uncle, and Ms. S. testified that she did not discuss the transfer with either of them. I therefore do not infer that this amounted to repayment of the amounts advanced in July 1997. Nor do I accept the various other theories suggested by Mr. S. in his evidence, for example, that Ms. S. was stealing money from the restaurant, or that she was secretly trying to hide money from the Canada Revenue Agency, or that she was sending money to China to invest, which her parents later sent back to her. The evidence as a whole does not support any of those theories on a balance of probabilities.
BC Family Parental Loans Or Gifts – Presumption of Resulting Trust
[126] While in this case the Locke factors do not provide strong evidence that at the time of the advances the transferor had formed the intention that they would be loans, neither is there any real evidence that they were intended to be gifts to Mr. and Ms. S.
[127] With respect to each of the advances, I find, to use the words of Pecore, that evidence of the transferor’s intent at the time is either unavailable or unpersuasive, and I therefore turn to the presumptions as a guide. The presumption of advancement does not apply, as these were gratuitous transfers and were not from a parent to a minor child. Rather, the presumption of resulting trust applies, and I find that each of the transfers must be considered as a loan to the claimant which, by virtue of s. 86(a) of the FLA, is a family debt for those transfers that occurred before separation.
[128] As to the transfers after the date of separation, s. 86(b) of the FLA provides that they may be considered family debts if they were incurred for the purpose of maintaining family property. Ms. S. testified that they were. I am satisfied on the evidence that without the advances, the claimant would not have been able to make the payments required to maintain the Ontario Place home where she was living with the three children, and I therefore find that they are family debts.
BC Family Parental Loans Or Gifts – No Interest When No Paperwork
[129] My finding that these advances by family members are family debts is limited to the principle amounts only, and not to the interest claimed. Ms. S. seeks a finding that the amount owed to Fan Lai Man should include $92,250 in interest payable at 3.5%, in addition to the principle amount of $100,000. She also submits that the amount owing to Kwok Keung Wong should include $5,092 in interest, in addition to the principle amount of $26,075. I do not agree that the interest claimed constitutes a family debt. There was no discussion of a requirement to pay interest at the time the monies were advanced, and on the facts of this case, the presumption of advancement applies only to the principle amount, not to interest.
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