In McNamee v McNamee, the Ontario Court of Appeal outlined the constituent elements of a legally valid intervivos gift (a gift made during one’s lifetime). For there to be a gift, there must be a:

  • Intention to make a gift on the part of the donor, without consideration or expectation of remuneration;
  • Acceptance of the gift by the donee; and a
  • Sufficient act of delivery or transfer of property to complete the transaction.

Acceptance of the gift can be implied by silence and is only negated by express rejection by the donee. Delivery of the property may be actual (e.g. physically transferring the property); constructive (giving the donee the safe combination which would be impractical to physically hand over); or symbolic (giving the donee the key to your house).

When the requirements of a legally valid inter vivos gift are met, a gift cannot be revoked.

It is important to ensure the person making the gift has the mental capacity to make the gift. Under the law, in order to be capable of making a gift, a person must be able to:

  • Understand the nature of the gift; and
  • Understand the specific effect of the gift in the circumstances.

The size of the gift in relation to the donor’s overall assets is also relevant to determining capacity to gift.

A GIFT?

In McNamee v McNamee, the Ontario Court of Appeal outlined the constituent elements of a legally valid intervivos gift (a gift made during one’s lifetime). For there to be a gift, there must be a:

  • Intention to make a gift on the part of the donor, without consideration or expectation of remuneration;
  • Acceptance of the gift by the donee; and a
  • Sufficient act of delivery or transfer of property to complete the transaction.

Acceptance of the gift can be implied by silence and is only negated by express rejection by the donee. Delivery of the property may be actual (e.g. physically transferring the property); constructive (giving the donee the safe combination which would be impractical to physically hand over); or symbolic (giving the donee the key to your house).

When the requirements of a legally valid inter vivos gift are met, a gift cannot be revoked.

It is important to ensure the person making the gift has the mental capacity to make the gift. Under the law, in order to be capable of making a gift, a person must be able to:

  • Understand the nature of the gift; and
  • Understand the specific effect of the gift in the circumstances.

The size of the gift in relation to the donor’s overall assets is also relevant to determining capacity to gift. The larger the gift in proportion to a person’s assets the greater the capacity required.

Depending on the facts surrounding a gift, a claim can be made that the recipient holds the gift in trust for the estate of the person transfering the property and a gift was not the intended consquence.

The issue of a valid gift often arises in the context of joint accounts which are sometimes used as a means to avoid probate fees. The joint account holder may argue they are the sole owner of the funds as the surviving joint account holder rather than a trustee of the funds for the benefit of the other account holders estate.

It is important to ensure gifts made are properly documented in order to carry out the wishes of the donor.

Contact us to discuss the validity of a gift and how to ensure a proper gift is made, including in relation to joint accounts.

 

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