What happens when parents of one spouse try to help their child- who is married, or in a marriage like relationship – buy a house by giving a down payment to their child or the happy couple or by paying off their mortgage? Can this gift to their child be excluded or is it a joint gift when a relationship goes sideways and comes to an end? Does it matter if the cheque is to one spouse or both? Is any credit given to the natural child of those parents as opposed to the in law child? Parental gifts often change into loans at the end of a relationship when the parents of one spouse see their advance as going to a spouse they no longer like. The decisions on Vancouver parental gifts and family property make it clear the gift will be presumed to be joint in the absence of compelling evidence it was a loan or a gift to only one spouse.
In Guichon v. Guichon the wife claimed a $200,000 gift from her parents to buy the couple’s first home should be excluded such that she received all of this $200,000 without sharing the gift after her marriage broke down. The court disagreed citing earlier presents on Vancouver parental gifts and family property. If you want to receive credit consider a mortgage registered against the property or other security documents. Repayments on this loan should also be enforced so complications causing the loss of the exclusion do not apply. our Vancouver parental gifts and family property lawyers at MacLean Law will help you deal with structuring a loan or gift so the intentions of the parties are respected and conversely to make sure no attempts to claw back a joint gift are allowed to succeed.
Here is the key extract from the recent decision with the important parts bolded on Vancouver parental gifts and family property in BC:
[11] Ms. Guichon claims credit for $200,000 that she says was a gift from her parents in 2003. The parties used that money to buy a condominium, which they later sold when they bought the Point Grey house.
[12] Section 84 of the FLA defines family property to include all property owned by at least one spouse. Section 85 sets out a number of exclusions from the general rule including, in s. 85(1)(b.1), gifts to a spouse from a third party.
[13] A cheque for $200,000, dated July 26, 2003, was made out to Ms. Guichon only. Her father, Michael Guichon, testified he intended it as a gift to his daughter with no strings attached and she was free to do with it as she wished. He refused to agree to the suggestion on cross-examination that it was a gift to both spouses to allow them to purchase a home.
[14] But the cheque was written only four days before the closing of the condominium purchase. Mr. Guichon agreed that he knew before then that the couple was looking for property and that he had viewed some potential purchases with them. He had previously written a $20,000 cheque to a realtor (later repaid by Ms. Guichon) that he knew was being used as a deposit. The note on that cheque says “deposit for Jeannette & Lee.”
[15] When spouses divorce, parents of one frequently say that any money they gave during the marriage was either a loan or a gift to only their daughter or son, with no intention to benefit the other spouse. Because those recollections are naturally coloured by the subsequent divorce, the court must look to the circumstances and intentions at the time the money was advanced.
[16] All of the evidence supports the inference that Mr. Guichon knew when he advanced the money that it was being used by both parties to buy a family home. In Cabezas v. Maxim, 2014 BCSC 767 at para. 68 , Hinkson C.J. said:
However, where a parent chooses to provide funds to a child for the purchase or maintenance of the family residence (to use the language of the [FLA]), those funds are presumed to be a gift to both the child and his or her spouse. Absent evidence rebutting that presumption, the funds and any proceeds derived from them are family property under s. 84 of the [FLA].
[17] Cabezas was followed in H.C. v. H.C.P., 2014 BCSC 1775 at para. 71 where Burke J. said:
Even if I were to conclude in this case that the claimant’s parents gifted the disputed amount to the claimant, the case law reflects a presumption of gift to both a child and his or her spouse to facilitate the purchase of a family home when a parent chooses to provide funds to the child for the purchase of a family residence.
[18] The same presumption and the same result apply in this case. The evidence put forward by Ms. Guichon does not rebut the presumption that the money was given to both spouses and I find that the $200,000 advanced by her parents was family property.
Vancouver parental gifts and family property lawyers at MacLean Law will help you come to a fair result. Contact us early before the problem has time to grow out of control. 604-602-9000.
