In my 25 years as a family lawyer in British Columbia, I have witnessed countless disputes involving parental generosity during relationships. Parents transfer property titles to their children, provide substantial cash gifts for down payments, or pay off mortgages—all with the best intentions. However, when relationships break down, these well-meaning gifts often become contentious battlegrounds.
The Critical Question: Loan or Gift? To Whom?
The fundamental issue in these disputes is whether the parent’s contribution was a loan or a gift. If it was a gift, was it intended solely for their child, or for both partners in the relationship? This distinction determines whether the property remains excluded from family property division.
BC Family Law: Exclusion Principles and When They’re Lost
Under the BC Family Law Act, Section 85(1)(b), gifts from third parties to one spouse before or during the relationship can be excluded property. However, multiple legal principles govern when this exclusion is lost.
The Locke Framework: Loan or Gift?
Locke v. Locke, 2000 BCCA 334, established the fundamental principle that transfers from parents to adult children are presumed to be loans held on resulting trust, not gifts. This creates a rebuttable presumption—the burden falls on the child to prove the parent intended a gift. Courts examine:
– Absence of loan documentation
– No specified repayment schedule
– No security provided
– No demand for repayment
– The overall relationship and circumstances
Critical Legal Principles:
1.Intention at Time of Transfer: Courts examine the donor’s intention when the gift was made, not retrospective claims during separation.
2. Gift to Whom?: Even if proven as a gift (not a loan), courts must determine whether it was intended for one child alone or for both partners.
3. Loss of Exclusion – Section 85(3): Excluded property becomes family property if used to acquire, preserve, maintain, improve, or pay down debt on family property held in both names during the relationship.
4. Burden of Proof: The spouse claiming exclusion must prove on a balance of probabilities that the gift was intended solely for them.
5. Tracing Requirements: The claiming spouse must trace the excluded funds into the current property (Section 85(2)).
6. Joint Registration Presumption: Registering property in both names creates a strong presumption that parental contributions intended to benefit both spouses, defeating exclusion.
When Exclusion Survives: Exclusion is maintained when contributions are clearly documented as gifts (not loans) intended for one child only, kept separate, and property remains in that child’s sole name.
Protect Your Family’s Generosity
Document everything. Have parents sign a written declaration clarifying: (1) whether the transfer is a gift or loan, and (2) if a gift, whether intended for their child alone or both partners. Seek legal advice before accepting significant parental contributions. Consider registering property in one name only if exclusion is intended. These simple steps provide crucial evidence if disputes arise.
Need Family Law Guidance?
If you’re facing disputes over parental gifts or other family property issues, contact George Lee Law at 604-681-161 for experienced legal representation in English, Cantonese, or Mandarin.