Under Ontario law, upon separation married spouses are entitled to an equal share of the value of the wealth accumulated by both parties during the marriage. There are exceptions, however. The value of certain property, including a gift received by a spouse, is excluded from sharing.
In McNamee v. McNamee, 2011 ONCA 533 (add’l reasons at 2011 ONSC 575) the Ontario Court of Appeal confirmed that a gift “with strings” is nevertheless a gift. In that case, the husband’s father had undertaken an estate freeze involving a transfer of 500 common shares in his company to the husband. The fact that the husband was unaware of two conditions attached to the transfer did not vitiate his acceptance of it and therefore invalidate the gift.
It was sufficient that the husband understood the essential nature of the transaction and willingly accepted title to the shares. The court also held that, in determining whether a transfer of property is indeed a gift, it is the intention to donate that is the essential consideration and not the motive or purpose of the donor. The fact that the primary purpose of the husband’s father in transferring the shares was to support the estate freeze did not mean that he did not intend to gift the shares. The value of the husband’s shares was therefore excluded from sharing with the wife upon the parties’ marriage breakdown.