League and Williams Lawyers

Tag: Inter Vivos Gifts

  • Inter Vivos Gifts: An Estate Planning Tool

    Inter Vivos Gifts: An Estate Planning Tool

    When reading about gift-giving in the context of estate law, you’ve probably come across the term inter vivos several times. An inter vivos gift is property that the gift-giver transfers while they’re living. The opposite of an inter vivos gift, a testamentary transfer, is a gift given after the gift-giver has passed away. Typically, these transfers are made through instructions in someone’s will. While people traditionally think only of testamentary gifts when they’re estate planning, both types of gifts play an important role in an effective estate plan.

    Legally Binding Gifts

    Before choosing to give an inter vivos gift, it’s important to understand when a gift is legally binding and when it’s not. Gift-givers should be careful that they’re giving valid gifts, especially when gifting large assets such as land. In order for an inter vivos gift to be legally binding, there are two requirements:

    1. The donor must have intended to make a gift, and
    2. The donor must have delivered the gift to the donee.

    Although these criteria seem straightforward, they can complicate gifts of real estate. This is because the gift-giver doesn’t necessarily ‘deliver’ the gift. Sometimes, testators have a clear intent to make an inter vivos gift but just don’t get around to finalizing the transaction before their death. In this case, the gift will not take effect and the asset will fall into the estate. For more information, read our blog post on imperfect gifts.

    Benefits of Inter Vivos Gifting

    Gifts are not taxable in British Columbia.

    Inter vivos gifts are an extremely powerful estate planning tool in BC. When the gift-giver gives an inter vivos gift, the asset is no longer part of their estate. This saves on probate fees and the donee will receive the asset much sooner than if it went through the estate administration process. Further, there can be great sentimental value in gifting before one’s death as they’re able to watch their loved ones enjoy the gift. For more information, read our blog on the advantages of gifting before death.

    Types of Inter Vivos Gifts You Can Make

    Inter vivos gifts can be basically anything you choose – you can gift cash, financial accounts, real estate, or even joint tenancy in a property. The gift of joint tenancy is a particularly useful tool because of real estate’s high value. You can only establish joint tenancy during your life, and never explicitly as a testamentary gift. People often associate joint tenancy with spouses living together in a house. However, you can use joint tenancy to effectively create a succession agreement with the testator’s beneficiaries.

    Joint Tenancy and Resulting Trusts

    When people transfer property in joint tenancy, a common problem is the lack of clarity about their intentions for the property. There is a presumption that a transfer in joint tenancy is not made with the intent to gift, rather with the intent to be held in trust – the presumption of resulting trust. In other cases, it can be unclear whether the testator intended for the joint owner to be gifted the property upon their death. For joint tenancy gifts and all gifts in general, it’s important to be extremely clear about what your intentions for the asset are. In many cases, it’s a good idea to document your intentions in case there is a dispute over your estate after your death.

    When preparing an estate plan, you should always consider the possibility of naming inter vivos gifts to your loved ones. If you’re unsure how you might give gifts before your death, contact an experienced estate lawyer today. We will work with you, ensuring the perfect estate plan for your situation, maximizing your estate’s value and your loved one’s prosperity.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Unconscionable Procurement: Voiding a Gift

    Unconscionable Procurement: Voiding a Gift

    As part of their estate plan, people often elect to give inter-vivos gifts to their loved ones. This can help to minimize probate fees, and to allow loved ones to enjoy their inheritance earlier. Many testators may not realize that there are several reasons the courts may deem an inter-vivos gift invalid. For example, a gift of real estate may be considered imperfect if it was not officially registered with the Land Title and Survey Authority of BC, making the gift void.

    A less common reason for voiding an inter-vivos gift is the doctrine of unconscionable procurement. If someone doesn’t fully understand their actions when making an inter-vivos gift, the doctrine of unconscionable procurement can make the gift voidable. This equitable doctrine protects vulnerable gift-givers from being exploited.

    When the Doctrine of Unconscionable Procurement can be Enacted

    A gift-giver must have an intention to make a gift in order for the gift to be valid.

    The doctrine of unconscionable procurement is intended to protect against undue influence. It applies when a gift transfer is arranged by the recipient and doesn’t reflect the giver’s true intentions. In these cases, the gift giver may not fully understand what’s happening or the nature of the transaction. It’s important to note that a successful claim doesn’t automatically void the gift—it makes the gift voidable.

    In order to have a successful unconscionable procurement claim, there are two primary elements that must be found:

    1. One person receives a gift from another; and
    2. The recipient of the gift was actively involved in the process of receiving the gift, and arranging the transfer.

    When these criteria are met, it raises suspicion that the gift-giver may not have fully understood the gift. At this point, the burden of proof shifts to the defendant. They must show, on a balance of probabilities, that the gift wasn’t unconscionably procured. This means that they must provide evidence which demonstrates that it is more likely than not that the gift giver understood the nature and consequences of the transfer, and intended to make it.

    A Case Which Demonstrates This Doctrine

    In the case of Gefen v. Gaertner (2019), a handful of gifts were voidable under the doctrine of unconscionable procurement. The deceased mother had elected to give more than 50% of her estate in inter-vivos gifts to one of her three children. The two children decided to challenge the transactions under the doctrine of unconscionable procurement. As described in the case, unconscionable procurement requires that a “person who obtains a benefit from another by voluntary donation must establish that the donor did so voluntarily and deliberately, knowing what they were doing.” The two children were able to successfully prove the two elements of unconscionable procurement, showing that their mother did not make these gifts voluntary and deliberately.

    While not always the case, it is common for elderly people to give gifts that have been unconscionably procured. If the recipient of the gift is overly involved and pushing to receive a gift, this could be grounds for an unconscionable procurement claim.

    If you or a loved one have been wronged through an unconscionably procured gift, contact an experienced estate lawyer today. We will help to ensure that you receive the inheritance you’re entitled to, even if that means making the gift voidable.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.