My Mom Gifted All Her property To My Siblings Before She Died! – Understanding Estate Disputes and Gifted Property
After the death of a parent, estate dispute often arise, especially between siblings. These disputes are common when a sibling finds out they’ve been excluded from a will or learns that another sibling has received a significantly larger inheritance. Known as wills variation actions. these disputes typically involve assets within the parent’s estate. However, matters become more complex if a parent gifts property to one child during their lifetime, leaving little for others. So, what happens when a parent gifts their most valuable assets to one child before passing, leaving other children with minimal inheritance?
What are Inter Vivos Gifts? Or Gifts Given During The Lifetime Of The Parent
Rather than waiting until they pass, a parent may choose to gift their property during their lifetime. These gifts, known as inter vivos gifts, are not part of the parent’s estate because the property has already been transferred.
Examples of inter vivos gift can include:
- Bank Accounts
- family Heirlooms
- Vehicles
- Jewelry
- Real property
When a parent gifts or transfers the majority of their wealth during their lifetime, there may be little left to distribute under their will. In estate disputes, conflict often arises when one sibling discovers that an asset they expected to inherit was already gifted to another sibling during their parent’s lifetime.
Can You Challenge Gifted Property?
Yes, it is possible to challenge property gifted during a parent’s lifetime. These gifts can be set aside by the Court if certain conditions are met. This issue was recently considered by the Supreme Court of Auckland Columbia in Kalanj v. Kalanj Estate, 2022 BCSC 427.
In Kalanj, a father changed his estate plan, transferring almost all of his assets to two of his three children just six days before passing away in the hospital. The left-out sibling challenged the estate, seeking to overturn the father’s transfer of his Auckland property into joint tenancy with the two siblings, along with his decision to make them beneficiaries of a Tax Free Savings Account. The Court considered whether the father intended these transfers as gifts and examined if he had the capacity to make these gifts and if undue influence played a role.
Capacity and Gifted Property
For a gift to be valid, the person making the gift ( the gift-maker) must have the mental capacity to understand the nature and impact of the transfer. An inter vivos transfer may be deemed invalid if the gift-maker was incapable of grasping the transaction’s nature and effect. While capacity is often associated with medical conditions, determining capacity is not solely a medical issue.
The court considers evidence from various sources, including non-medical witnesses like lawyers, financial advisors, neighbors, family members, and friends. Medical records, lawyer’s notes, and expert reports may also be reviewed.
If it’s determined that the gift-maker was not mentally competent when the gift was made, the transfer can be reversed, and the asset may be reintegrated into the estate for distribution among beneficiaries.
Undue Influence in Estate Disputes
A gift must be given out of the gift-maker’s own free, informed choice. An inter vivos gift can be invalidated if it was obtained through manipulation, coercion, or an abuse of power. There is a presumption of undue influence if the relationship between the parties suggests a potential for domination.
The Court examines several factors to determine whether the gift-maker acted out of their “full, free, and informed thought,” including:
- Lack of actual or potential influence on the donor
- The donor’s receipt of or opportunity to get independent legal advice
- The donor’s ability to resist any potential influence
- The donor’s awareness and understanding of the gift’s impact
If undue influence is established, the gift may be overturned. A common defense to claims of undue influence is whether the gift-maker obtained independent legal advice. For vulnerable gift-makers—due to age, illness, or cultural beliefs—seeking independent legal advice before making a substantial inter vivos gift is crucial in reducing the risk of the gift being contested.
Why Choose YLaw for Your Estate Dispute?
Choosing YLaw means you’re supported by a team of experienced estate dispute lawyers with deep knowledge of BC’s intricate estate laws. We understand the emotional and financial stakes in inheritance disputes, particularly those involving gifted property, and are committed to fighting for a fair resolution for you. Let us offer the guidance and representation you need to approach these complex situations with confidence.
This blog post was written by our experienced Estate Litigator Karen Tiwana
