Court Cases & Orders

Just in Time for Gift-Giving Season: Court Explains Law on Inter Vivos Gifts

Written by Russell Alexander / (905) 655-6335

A recent Ontario case involved an unpleasant Estates dispute between the adult children of a now-deceased woman.  The crux of the matter was whether the mother had gifted over $400,000 to her son Terrance in the months before she died – or whether he had pilfered her bank accounts while ostensibly acting under Power of Attorney for Property.

Terrance admitted that he withdrew $371,000 from his mother’s account soon after she gave him joint access and appointed him Attorney. He transferred most of those funds into his own accounts, or into some held by his wife Sylvia and son Liam.  He also transferred $78,000 from his mother’s bank account directly to his Liam.

But Terrence claimed there were all gifts from his mother inter vivos (which is Latin for “between the living”).  By the time the mother died about a year later, at age 84, there was only $47,000 left in her account.

Terrence’s sister Kathleen – from whom he had been estranged for several years – accused him of fraudulently draining their mother’s account.  Not surprisingly, both Sylvia and Liam gave evidence to back up Terrence’s version of events.

Kathleen asked the court to resolve the matter; it sided with her.

After hearing the evidence, the court ruled that none of the money had been validly gifted to Terrence by his mother, nor was Liam the valid recipient of any money from her. Together with Sylvia, they were all liable for the wrongful removal of the funds.

The court took the opportunity to explain what constitutes a valid “gift” in law. It started by noting that the definition of a gift is simply “a voluntary transfer of property to another without consideration”.   To prove there was a gift, the recipient must satisfy a three-part test; applied to these facts it could be described this way:

To prove that the funds comprising the Transferred Amount were gifts, Terrence and Liam must show that [their mother] intended to make the gifts without consideration or expectation of remuneration; that the donee accepted the gift; and that [their mother] delivered or transferred the funds to complete the transaction.

In this case, neither Terrence nor Liam met the onus to prove that they had been gifted any funds.  For example, the documents and evidence clearly showed that Terrence had transferred money to Liam. But there was nothing to show that the mother had herself delivered or transferred the funds, or even that she specifically directed Terrence to do so while she was alive.  Similarly Terrence had no authority to transfer any money into Sylvia’s account, nor to use his mother’s money for his own purposes.

In coming to this conclusion the court also accepted the evidence of a non-family witness, who stated that right before the mother’s death, her mental capacity was on the decline.  She had given Terrence access to her funds, trusting him to use them only to fix up her home in preparation for sale. The mother simply did not realize or understand he would have unfettered access to all her money, the witness testified.

The court ordered Terrence to repay all the money he took, since he was in fraudulent and dishonest breach of his fiduciary duty to his mother under the Power of Attorney.  Liam was ordered to return the funds as well, based mainly on the court’s finding he had been unjustly enriched.  As for Sylvia, she was declared to be in “knowing receipt of trust property” placed into her account, with the actual knowledge it was obtained by Terrence in breach of his legal obligations to his mother.  She was complicit and participated in her husband’s breaches of duty, and was ordered to return the ill-gotten funds as well.

For the full text of the decision, see:

Doherty v. Doherty, 2023 ONSC 1536 (CanLII)

Stay in Touch

Keep learning about the latest issues in Ontario family law! Subscribe to our newsletter, have our latest articles delivered to your inbox, or listen to our Podcast Family Law Now.

Be sure to find out more about the "new normal", by visiting our Covid-19 and Divorce Information Centre.

About the author

Russell Alexander

Russell Alexander is the Founder & Senior Partner of Russell Alexander Collaborative Family Lawyers.