Wait… that wasn’t for you!
With the high cost of real estate, mortgage stress tests and increased student debt, it has become ever more challenging for young adults to get into the real estate market. As a result, many of our clients wish to assist one or more of their children (or grandchildren) with the down payment needed to purchase their first home; two issues immediately come to mind:
First, parents may consider the gift as an advance on the child’s inheritance. Prior to 2014, there was, at law, a presumption of advancement; the Wills, Estates and Succession Act abolished this presumption and the law no longer presumes a gift from a parent to an adult child is intended to be an advance of that child’s inheritance. If, however, the gift is to be considered an advance on the child’s inheritance, you want clear evidence of your intention and should take steps to update your last will to reflect this and to ensure your estate planning objectives will be achieved.
Second, when making these kinds of gifts, parents fail to realize, until it is too late, that the home the child purchases with the gifted funds may not be protected from the child’s current or future spouse (including a common law spouse) in the event of a relationship breakdown. Under the BC Family Law Act, gifts to a spouse from a third party are excluded from family property; will there be sufficient paperwork to evidence the gift several years (or decades) after the house is purchased?
In addition to assisting you with documenting your gift, experienced lawyers can advise you of the advantages and disadvantages of the various options available to enable you to make an informed decision as to how best to achieve your ultimate objective – helping your child get into the real estate market.
For more information on how to protect your gift, please contact Kim Karras or Brooke Fernandes at BKS LAW at 604-259-1620 or toll free at 877-470-7535 or by email at [email protected] or [email protected]