We have plenty of clients who ask about ‘Gifting’ (investments/property/cash) to their children or grandchildren. Many seniors are choosing to do this while they are alive so they can see their loved ones enjoy the assets. If a child or grandchild is married, it does complicate the ‘ownership’ of the assets once it’s been gifted.

Before gifting, clients ask how Newfoundland & Labrador Family Law treats ‘matrimonial assets’ and how that affects whether a gift to a child or grandchild could become part of matrimonial property. A clear ‘pre-nuptial agreement’ is often the best way to identify personal assets that you don’t want to be part of a marriage, but the some rules do allow assets to be segregated from each spouse

Here’s what the NL Family Law Act says:

Key Newfoundland/NL rules on matrimonial assets

• In Newfoundland, property division on divorce is governed by the Family Law Act (RSNL 1990, c. F-2.)
• “Matrimonial assets” are broadly defined to include all property acquired by either or both spouses during the marriage, subject to certain exceptions.
• However, the Act explicitly provides for exclusions — certain classes of property that do not automatically become part of the matrimonial asset pool.
• Among those exceptions are gifts and inheritances (to a spouse alone), personal injury awards, assets acquired after separation, personal effects, business assets, and property already excluded under a marriage contract or separation agreement.
• That said, even an excluded asset (like a gift) can lose its excluded status if it becomes intermingled with matrimonial property — e.g. used for the matrimonial home, deposited into a joint account, or otherwise indistinguishably mixed with other family funds.

How this applies to the question of gifting from a parent to a child;

Putting that all together:

If a parent gives a gift to a child (i.e. not to the couple) with the intention that it is a personal gift, then under NL law that gift would generally qualify as excluded property, not part of matrimonial assets, provided it is kept separate.
However, if the child (or spouse) takes that gifted money and uses it in a way that mixes it into the “family pot” (e.g. buys jointly titled property, invests it jointly, uses it for household expenses or mortgage payments), then a court could treat it (or part of it) as having become matrimonial property, because it loses its separateness.
The onus is usually on the person claiming exclusion (i.e. the one who received the gift) to prove the asset remained distinct (i.e. “traceability” of the gift).
These rules are a nice guideline to ‘gifting’ and should be discussed with family members before proceeding. Some planning — through conversations, legal agreements, or advice — can make a big difference.

Every situation is different, so as with all questions about Family Law, we recommend that clients consult a lawyer and consult a financial advisor to help protect your intentions and your future.