Gifts Before Death: Advancement or Gift in Ontario Estates

A parent helped one child with a down payment, tuition or a loan. Years later the parent dies, and the siblings disagree. Was that money an early share of the inheritance, or a gift that has nothing to do with the estate?

This article explains the question in plain terms and the practical steps families take. The answer in any case turns on the particular facts, the wording of the will and the evidence, so a lawyer should confirm it.

Advancement and gift: the basic idea

A gift is money or property given freely, with no expectation that it be accounted for later. An advancement is a payment made during life that the giver meant as a part payment of what that person would later receive from the estate.

How a particular payment is treated when the estate is divided depends on the parent's intentions, the wording of the will and the circumstances, so it is worth confirming with a lawyer how this applies to your situation.

Why it comes up and who decides

An estate trustee collects the estate assets, pays taxes and debts, and distributes the residue to those entitled. The trustee does not get to pick favourites; the job is to follow the will and the law.

A legal representative who distributes estate property without a CRA clearance certificate is personally liable for unpaid amounts, up to the value of the assets distributed. A court may relieve a trustee from personal liability for a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. Both points are reasons for a trustee to get advice before paying out when siblings disagree.

What evidence tends to matter

• What the will says about earlier gifts or loans.
• Any note, letter, email or message from the parent when the money was given.
• Bank records showing the amount, date and any repayment.
• Whether anyone treated it as a loan at the time.
• Whether other children received similar help.

Memories of what a parent said tend to differ between siblings, so records from the time carry weight. Gather them early.

Assets that never reach the estate

Not everything is divided under the will. Life insurance money with a designated beneficiary does not form part of the insured's estate. Estate value for Estate Administration Tax also excludes assets with a beneficiary designation, jointly owned assets that pass automatically to the other owner, and registered plans with a designation.

So a sibling who seems to receive more may be receiving it through a designation or joint ownership, not through the will. A dependant's support claim can still reach designated assets, because life insurance owned by the deceased and amounts payable under a plan designation are deemed part of the net estate for that purpose.

What to do next

• Collect the will and any records of the earlier payments.
• Write down, with dates, what each sibling remembers.
• Ask the estate trustee to hold off on distributing the disputed share.
• Talk to a lawyer about whether the payment was an advancement, a gift or a loan.
• Consider a negotiated settlement before going to court.

Frequently asked questions