Inter Vivos Gifts: An Estate Planning Tool

When reading about gift-giving in the context of estate law, you’ve probably come across the term inter vivos several times. An inter vivos gift is property that the gift-giver transfers while they’re living. The opposite of an inter vivos gift, a testamentary transfer, is a gift given after the gift-giver has passed away. Typically, these transfers are made through instructions in someone’s will. While people traditionally think only of testamentary gifts when they’re estate planning, both types of gifts play an important role in an effective estate plan.

Legally Binding Gifts

Before choosing to give an inter vivos gift, it’s important to understand when a gift is legally binding and when it’s not. Gift-givers should be careful that they’re giving valid gifts, especially when gifting large assets such as land. In order for an inter vivos gift to be legally binding, there are two requirements:

1. The donor must have intended to make a gift, and
2. The donor must have delivered the gift to the donee.

Although these criteria seem straightforward, they can complicate gifts of real estate. This is because the gift-giver doesn’t necessarily ‘deliver’ the gift. Sometimes, testators have a clear intent to make an inter vivos gift but just don’t get around to finalizing the transaction before their death. In this case, the gift will not take effect and the asset will fall into the estate. For more information, read our blog post on imperfect gifts.

Benefits of Inter Vivos Gifting

Inter vivos gifts are an extremely powerful estate planning tool in BC. When the gift-giver gives an inter vivos gift, the asset is no longer part of their estate. This saves on probate fees and the donee will receive the asset much sooner than if it went through the estate administration process. Further, there can be great sentimental value in gifting before one’s death as they’re able to watch their loved ones enjoy the gift. For more information, read our blog on the advantages of gifting before death.

Types of Inter Vivos Gifts You Can Make

Inter vivos gifts can be basically anything you choose – you can gift cash, financial accounts, real estate, or even joint tenancy in a property. The gift of joint tenancy is a particularly useful tool because of real estate’s high value. You can only establish joint tenancy during your life, and never explicitly as a testamentary gift. People often associate joint tenancy with spouses living together in a house. However, you can use joint tenancy to effectively create a succession agreement with the testator’s beneficiaries.

Joint Tenancy and Resulting Trusts

When people transfer property in joint tenancy, a common problem is the lack of clarity about their intentions for the property. There is a presumption that a transfer in joint tenancy is not made with the intent to gift, rather with the intent to be held in trust – the presumption of resulting trust. In other cases, it can be unclear whether the testator intended for the joint owner to be gifted the property upon their death. For joint tenancy gifts and all gifts in general, it’s important to be extremely clear about what your intentions for the asset are. In many cases, it’s a good idea to document your intentions in case there is a dispute over your estate after your death.

When preparing an estate plan, you should always consider the possibility of naming inter vivos gifts to your loved ones. If you’re unsure how you might give gifts before your death, contact an experienced estate lawyer today. We will work with you, ensuring the perfect estate plan for your situation, maximizing your estate’s value and your loved one’s prosperity.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.