Vancouver Gifts Excluded Family Property lawyers deal with valuing and dividing family property, as well as ensuring the starting value of excluded property is proven and retained by the party claiming the property exclusion. MacLean Law’s award winning Vancouver family property lawyers handle medium to multi million dollar valuation, equal and unequal division of family property and debts and excluded family property claims.
Gifts As BC Excluded Property Explained
In today’s blog, by Lorne MacLean, QC we discuss a new case dealing with the test for when a gift is proven and excluded. Simply put, gifts you receive ALONE during your relationship by someone other than your spouse have their starting value, but not the gain in value on the gift excluded. For example you received a cottage worth 1 million that increase in value to $2 million. The amount your spouse shares on the gift is only $500,000 being one half of the gain on the initial $1 million dollar value of the cottage.
Remember, who the gift was TO makes a HUGE difference a gift jointly to both spouses would not normally be excluded but a gift to one likely will. So what is the test to make a gift excluded property? Our Vancouver family property lawyers and family debt lawyers handle all facets of property valuation, classification and family property division including gifts that are excluded property claims and cases where third parties claim repayment of monies as a loan. Our Vancouver family property lawyers have set precedents in the area of family property and debt division as well as a number of cases involving successful multimillion debt and trust claims.
Vancouver Gifts Excluded Family Property
In a recent BC Court of appeal decision of Zhao v. Fang the Court upheld a trial decision finding the gift was proven. Our top rated Vancouver Gifts Excluded Family Property lawyers liked the straightforward summary by the Appeal Court of what a gift is, and who has to prove the gift:
Excluded assets and findings of a gift
[24] Family property is defined in s. 84(1) of the Family Law Act, S.B.C. 2011, c. 25:
(1) Subject to section 85 [excluded property], family property is all real property and personal property as follows:
(a) on the date the spouses separate,
(i) property that is owned by at least one spouse, or
(ii) a beneficial interest of at least one spouse in property;
(b) after separation,
(i) property acquired by at least one spouse if the property is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either, or
(ii) a beneficial interest acquired by at least one spouse in property if the beneficial interest is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either.
(2) Without limiting subsection (1), family property incudes the following:
…
(g) the amount by which the value of excluded property has increased since the later of the date
(i) the relationship between the spouses began, or
(ii) the excluded property was acquired.
[25] Excluded property, defined in s. 85(1), includes “gifts to a spouse from a third party”. Under s. 85(2) the spouse making this claim has the burden of demonstrating that property is excluded property. The standard of proof is on a balance of probabilities (as in any civil case), but the evidence must be clear and cogent. If documentary evidence is not available, a party’s testimony on this issue is to be scrutinized for credibility. However, the judge is permitted to draw reasonable inferences from evidence that is less certain or precise in order to do justice between the parties: Shih v. Shih, 2017 BCCA 37 at paras. 43–44; see also Pisarski v. Piesik, 2019 BCCA 129 at para. 24.
[26] A gift is “a gratuitous transfer made without consideration”. For a gift to be legally binding, the donor must have intended to make a gift and must have made the transfer to the donee: see McKendry v. McKendry, 2017 BCCA 48 at para. 31.
Protecting The Exclusion From A Gift
However, once a gift is proved you have to also prove you have preserved any exclusion. Lorne MacLean, QC warns and the key ways of protecting excluded property are:
- Do not add to the excluded property any other family property that cannot be proven to be excluded property.
- Keep detailed records of the gift and gift asset values of all excluded property held at the commencement of the relationship, and of all excluded property received in the course of the relationship as of the date of receipt. Consider obtaining a professional valuation for assets like private corporation shares not having a readily ascertainable value.
- Do not permit contributions of any kind by the other spouse to the excluded property, as such direct contributions will leave the assets vulnerable to claims for division of the excluded property under s. 96 of the FLA.
- If you spend the excluded asset completely so none of it is left then you lose the exclusion entirely and if an asset drops in value so does the exclusion. Do not apply it to family debt to pay off a mortgage or line of credit for example.
- Most importantly, do not register any gift to you alone in joint names!
Whether something was a gift to one or both spouses or whether the gift was not in fact a gift or whether it was a loan is often an area of serious dispute that can total up to millions of dollars. Contact our Vancouver family property lawyers early on in a relationship if you are about to or have recently received a significant gift that you or the loved ones who made the gift want to protect.
