Institute for Divorce Financial Analysts™ (IDFA)
Estates & Wills & Trusts

Can delivery of a gift precede intention?

By Suzana Popovic-Montag

In the recent decision of McKendry v. McKendry, the British Columbia Court of Appeal considered the elements of a valid inter vivos transfer of property, particularly the timing of intention to make a gift. The central issue in the case was whether a written deed of gift under seal was necessary to complete a gift where legal title had previously been transferred into joint ownership.

Facts

Mary, a widow, had several adult children. In 2006, Mary’s son, John, moved into her house. He lived with her until her death in 2012. In 2008, Mary transferred legal title to the house to joint tenancy with John. At the time of the 2008 transfer, Mary did not intend to make a gift of the beneficial interest in the house to John; rather, she intended for John to hold the beneficial interest of the house in trust for her estate to be allocated among him and his siblings according to her will.

In 2010, Mary changed her mind in respect to the disposition of the house. Instead of a trust, she decided to leave the property to John outright as surviving joint tenant. She told her lawyer she understood the house would be John’s absolutely on her death and that he was not obligated to share it with his siblings. About a month later, Mary met with her lawyer to sign a new will. It included a provision stating:

I […] confirm that I wish to cancel any trust agreements or other documents imposing an obligation on my son to share the property I own at [the house] with my other children.  I want my home to be my son’s property on my death absolutely – no strings attached.  I have made this decision after much consideration and I fully understand that this gives my son the majority of my assets.  My house constitutes the majority of my assets.

After Mary’s death, three of her daughters commenced two actions against John: one seeking a declaration that he held the house in trust for the estate and the other seeking a variation of Mary’s will.

Trial decision

The trial judge found that Mary did not intend to make a gift of the beneficial interest in the house to John when she transferred legal title to him in 2008. The judge further found that Mary’s intention changed in 2010 when she decided to make a gift of the house to John. She held the transfer, made in 2008 “is not sufficient to perfect a gift of the survivorship interest in [the house] to John, because (as I have found) Mary did not intend at that time to make such a gift to John.” Further, when Mary did form the intention to make a gift of the house to John, Mary made no further steps to perfect the gift. In the absence of a written deed of gift under seal, the Judge held there was no legally binding gift.

BCCA decision

The Court of Appeal overturned the trial decision. The court reviewed the requirements for a valid inter vivos gift: “the donor must have intended to make a gift and must have delivered the subject matter to the donee. The intention of the donor at the time of the transfer is the governing consideration. In addition, the donor must have done everything necessary, according to the nature of the property, to transfer it to the donee and render the settlement legally binding on him or her.”

The court held that in 2008, Mary transferred only legal title to John (as joint tenant) and retained the entire beneficial interest for herself and her estate. In 2010, however, Mary renounced her beneficial interest in the right of survivorship in John’s favour. “In doing so, she clearly intended to make an immediate inter vivos gift of that incident of the joint tenancy to John.” Because she had already transferred legal title to John, she did everything necessary in 2010 to perfect the gift of the beneficial interest, bearing in mind the nature of the interest. The legal title would not have been affected by a deed of gift under seal, given her clear written intention. Mary’s intention was recorded in writing and no other act of delivery was required.

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