A Gift or Marital Property?
Matthew Katsionis, Vancouver & Calgary Family Lawyer
The gifts exchanged in a marriage – they could be jewelry, cars, boats, antiques, art. In some cases, even real estate, a condominium or a house. During a separation or divorce, spouses might claim these gifts as marital property.
The answer: it depends. In most instances, gifts during the marriage are separate property, excluding the other party from any claim. Issues arise, however, when there are questions about the gifting of the asset as a matter of fact.
So, how does a Court determine an asset to be gift or family property?
The court examines (a) intent, and (b) whether intent is consistent with actual circumstances.
Regardless of hindsight, what was the intent of the transferor at the time of transfer? If the evidence suggests the intent was a gift, then the court will rule accordingly. Evidence the Court will consider:
- Surrounding circumstances (birthday, Christmas, anniversary, etc.),
- Was there a rational purpose for the transfer outside of being a gift (eg, the transfer had an investment component),
- Evidence can be circumstantial or direct or a combination of both.
In British Columbia, without a clear determination of transferor intent, the Court will presume the intent of a gift if to their spouse.
Circumstances and Consistency
Oftentimes, there are cases where a gift is not the intention of the spouse. For example, a wife transfers real estate to her husband in order to protect the property from creditors or potential legal liability. To the outside world, the property belongs to the husband. However, between the parties, the husband is holding it in trust for the wife.
The transferor in this example needs to be careful. Issues of this nature have been litigated multiple times in the courts of British Columbia and, although the intent may be to circumvent creditors, the Court may view this scenario as a gift from wife to husband; the reasoning being that the transfer is inconsistent with the in trust “side deal”.
When making a determination, the Court looks at proposed intent of the transferor, the circumstances, the actual effect of the transfer, and whether the conduct of the transferor is consistent. In the aforementioned example, the conduct of the wife garnered no legal beneficial interest save and except the alleged side deal, prompting the Court to rule the transfer a gift.
The family lawyers at Crossroads Law regularly deal with complex transfers and cases of ‘gift or marital property’. Call today for your free 20-minute consult.