Gifts and Inheretence

Question

I received a gift during my marriage.  Do I have to share it with my spouse now that we are separated? 

Answer

Under the Family Law Act, married parties each calculate the growth in their net worth over the course of the marriage and equalize the amounts so that each benefit equally from the marriage as it relates to property. 

However, if one party received a gift or an inheritance from a third party during the marriage, the Family Law Act allows certain property to be excluded from the calculation of the “net family property” of a spouse, as well as any property into which the original gift can be traced.  For example, if from a cash gift of $50,000 a vehicle was purchased, which had a value of $20,000 on the date of separation, the party would be entitled to an exclusion of $20,000, the surviving value of the gift.

The first step is to determine whether the property in question was a gift or a loan.  Among other factors, a court will consider 1) whether there are documents stating that the transfer was a gift; 2) any conditions attached to the transfer of property; 3) any advances of a similar nature which were made to the spouse’s siblings; and 4) the likelihood or expectation of repayment.   

In the event a gift is established, a further consideration is whether the gift was made to only one spouse or was intended to be gifted to both spouses. 

It is critically important for anyone gifting property to state their intention in writing at the time of transfer and for the receiving party to retain proper records showing the history of a gifted property from the date of receiving it up to the date the parties separate.  Failure to take either of these steps may result in the exclusion of the gifted property being lost.