January 15th 2021
Whenever an individual gifts their property – whether it land, a boat, or money for instance – the intention of the donor is crucial. Sometimes this intention is not clear, and this can lead to litigation. This article considers gifts that are made while the donor is living, rather than gifts that are made under a Will. After reviewing some of the essential features of gift-giving, it explores a few cases where gift giving has resulted in a legal battle.
When you are the absolute owner of land or chattels (personal possessions) you have the right to make a voluntary transfer to another person of your own property. For a gift to be valid, the rule is that the gifted property must be delivered from the donor to the donee. This is because, without the actual transfer of possession of the item, it is unclear whether someone who says “I want you to have this” intends to depart with it absolutely. Only when there is a transfer of ownership simultaneous with the intention to gift does the item become the property of the donee. This means a verbal gift that is intended to be effective at a future date such as after the donor’s death cannot be invalid. Such gifts are possible through a Last Will and Testament. One final feature of gifts worth noting is that it is possible to make a gift with conditions. However, a gift will fail if a condition is not satisfied, and the item must be returned if a condition is broken.
Sometimes people regret giving. Consider the situation where an individual was given a ticket to a fundraiser and won a car when the ticket was entered into a raffle. The donor sued for the vehicle and argued he did not intend for the donee to have anything more than the right to attend the dinner. The court found the plaintiff made no conditions when he gifted the ticket and therefore the defendant had the right to any prize that the ticket might win. In another case, a father transferred the property to his son who later sold the home. The father disagreed with the decision to sell and asked the court to intervene. Unfortunately, the court found the transfer of the home was an absolute gift and the son was free to sell the property. Lastly, consider a recent case where a son sued his father after giving him a car three years before. The father was able to demonstrate through text messages that his son intended to gift him the car and that the son “did not want any money from him”. The son lost the case against his father.
The cases above show that the decision to gift property can have some unintended consequences. If you are considering making a gift to another person or family member, you may want to consult a legal professional to consider your options. Liddiard Law is knowledgeable in estate planning and may be able to offer some important insights to you!
Michael Craig Liddiard, BA MA JD | Liddiard Law Professional Corporation | michael@liddiardlaw.ca