Gifts and Inheritances exempted as family assets?
The BC Family Law Act exempts gifts and inheritances from division on a marriage breakdown. For parents who are interested in helping their adult children financially, this provision of the Act can give them some comfort that their adult child will be the sole beneficiary of these funds. However, as Mr Maxim unfortunately found out at the BC Court of Appeal (Cabezas v. Maxim, 2016 BCCA 82 (CanLII)), a parent’s intention must be expressed at the time the gift is made and especially not later during the child’s marriage breakdown.
Affordable housing has become a hot button issue in BC. It’s not uncommon for adult children to turn to their parents for help when buying a home or making mortgage payments. But any money a parent gives to an adult child becomes a family asset if the parent’s intention to give the money as a gift to that child only or an intention to advance funds as an early inheritance to that child is not clearly expressed and properly documented. If this intention is not clear an adult child’s spouse on the marriage breakdown may share the gift or inheritance equally. If your child needs financial help and you are considering giving him or her a significant amount of money, it is in your child’s best interest that your gift or early inheritance to him or her is documented properly. Clearly setting out your intention that your child is to benefit solely from your gift before any money changes hands may save your child thousands of dollars in legal costs later. If you are considering helping your child, call our firm to assist you in protecting that gift to your child.