Some elderly individuals, before they die, may wish to transfer money, real property or other assets to their children, or other relatives, as gifts. However, these kinds of transfers come at a risk. There are often disputes among family members concerning gifts, particularly the argument that the transferor was not of sound mind.
There are three requirements for a valid gift given during someone’s lifetime (known as an inter vivos gift). There must be:
1. An intention to donate;
2. Sufficient delivery of the gift; and
3. Acceptance of the gift.
In Foley v. McIntyre (2015 ONCA 382), Mr. Foley made three monetary transfers to his daughter while he was alive amounting to over $210,000 and a testamentary bequest of his savings bonds worth over $275,000 after his death. His son, on the other hand, was to receive the family farm. His son challenged the three monetary transfers and the testamentary bequest, alleging his father was subject to undue influence and did not have sufficient capacity to make the gifts and bequest.
Although Mr. Foley’s daughter managed his banking and general finances, she did not manage his investment portfolio. The Ontario Court of Appeal agreed with the trial judge that Mr. Foley was capable of making gifts and understood the consequences of what he was doing. Specifically:
· Mr. Foley had written instructions to his financial advisor regarding the transfers;
· Mr. Foley had a will specifying the bequest to his daughter;
· His financial advisor was responsible for initiating most of the meetings with Mr. Foley and his daughter was not present during the meetings;
· He was never put on medication for brain function or diagnosed with a mentally impairing condition;
· His financial advisor testified Mr. Foley told her his daughter was to receive the bequest and his son would receive the farm; and
· His advisor stated Mr. Foley kept a financial record and would have included a record of the transfers if he intended to loan the money to his daughter and not gift it to her.
The takeaway from this case is that a person receiving a gift must establish that the gift was a result of full, free, and informed thought. Evidence that the person making the transfer received qualified, independent advice can be used to support this position, but is not required in every case. Furthermore, in order to establish that a gift is valid, there must be corroborating evidence.
As the population ages, it will be more common that the elderly population transfers large monetary or real property gifts to loved ones. However, these gifts are often times challenged by others. The professional, experienced and cost-effective lawyers at Ottawa’s Vice & Hunter LLP are experienced in both litigation and elder law. Contact us and we would be happy to discuss your case and how we can be of service to you.
To reach the author of this blog, Bill Hunter, email firstname.lastname@example.org or call 613.232.5773 x 223.
Bill is the head of the Litigation Team at Vice & Hunter LLP. He has appeared before all the trial courts in Ontario and the Ontario Court of Appeal. He has extensive experience practicing in all areas of civil litigation and advises clients on elder law issues.