By 2026, an estimated $1 trillion will be transferred from baby boomers to their heirs. A significant portion of that will be comprised of gifts made during the donor’s lifetime—whether to family, friends, charities, or institutions. While a generous gift can be life-changing, it can also lead to unexpected legal headaches, if not handled properly.

What makes a gift legally valid in Ontario?

For a gift of property to be legally valid in Ontario, three elements must be met:

  • Intention: The donor must clearly intend to make a gift, with no expectation of compensation.
  • Acceptance: The recipient must accept the gift.
  • Delivery: There must be a sufficient act of delivery or transfer to complete the transaction.

If any of these requirements are not met before the donor passes away, changes their mind, or becomes mentally incapable, the gift will not be enforceable. Moreover, even if all the requirements are met, lack of proper documentation can make it difficult to prove the gift later—potentially leading to costly and prolonged disputes.

A real-life example: The cost of uncertainty

Consider a recent Ontario case of Buday v Buday (Estate).

An adult son, Brian Buday, believed his father had gifted him a property. He lived there and made significant and costly improvements, but the property remained in his father’s name. After his father’s death, Brian was compelled to prove the gift in Court. Although he was ultimately successful, the process took nearly four years and involved significant legal fees; an ordeal that could have been avoided with proper documentation and legal advice.

While there are special circumstances applicable to scenarios where a parent gifts property to an adult child (there is a presumption, at law, that the adult child holds the property in trust for the parent and the adult child bears the onus of proving, on a balance of probabilities, that the parent intended to transfer the property as a gift), Brian’s story can still be a lesson to others.

How to protect your gift

To minimize the risk of disputes and protect your interests, consider these steps:

  • Document the gift: Ensure the donor’s intention is clear and in writing.
  • Confirm capacity: If there are any concerns about the donor’s mental capacity, address them before the gift is made.
  • Complete the transfer promptly: Avoid delays that could jeopardize the transaction.
  • Avoid installments: Where possible, avoid the gift being made in installments (rather than a single lump sum).

Charitable gifts and public recognition

Charities, educational institutions, and hospitals often offer public recognition—such as naming a room or building—in exchange for a major gift. However, problems can arise if a donor does not fulfill their pledge after receiving recognition. This can lead to expensive legal and reputational issues. To avoid such complications, organizations should ensure that recognition is only granted once the gift is fully (or substantially) completed.

Why legal advice matters

Every gift is unique. Whether you are considering making a gift, are the intended recipient, or represent an organization, early legal advice can help you:

  • Avoid costly litigation
  • Ensure your intentions are respected
  • Protect your financial and emotional well-being

Kira Domratchev is a partner in Gowling WLG’s global Private Client Services Group specializing in estate, trust and capacity litigation. If you have questions about gifting property in Ontario or have any issues arising from a gift already made, please feel free to contact Kira at kira.domratchev@gowlingwlg.com.