Using Marriage Contracts to Protect Property Gifts

Published on 29 August 2022, 07:22:56 AM

You want to help the happily engaged couple, but not if it puts your property gifts at risk.

Propose a marriage contract before you give property gifts like a home, down payment, or cash towards a mortgage as a wedding present. It could save you future grief if your adult child separates or divorces.

Property gifts from parents that are ordinarily occupied as the matrimonial home are divided equally in the event of divorce. Your generosity takes a back seat to the Family Law Act, section 4(1). Before you know it, your best intentions could financially backfire.

Rules for selling the matrimonial home in Ontario. 

Gifting Property to a Child in Canada

We appreciate you want your adult children to be happy and prosperous. But giving gifts of real property can have tax consequences for you and your child. And, while your property gifts may come with “no strings attached” on the wedding day, you may not feel the same if the marriage goes south. 

See Canada Revenue Agency’s guidelines on giving capital property gifts. 

Unlike discretionary cash or investments you pass on to an adult child pre-marriage, property a married couple ordinarily occupies is shared equally in a divorce. That’s because the house, cottage, RV, travel trailer, boat, or time share you gifted your son or daughter could all be classified as matrimonial homes. 

Since property gifts are matrimonial assets, your gift is part of any potential divorce settlement.

Misconceptions about matrimonial home rights in Ontario. 

Making Marriage Contracts for Matrimonial Homes (Ontario)

Short of loaning property gifts to your child, holding it in a family trust that excludes their spouse, or keeping the title in your name, your next best defence is to encourage the couple to make a marriage agreement. That agreement becomes a marriage contract after the wedding ceremony. 

Who makes gifts to whom as part of the marriage agreement is easier to sort out with a contract. The agreement is legally binding, and can include any arrangements the couple agrees to, including relinquishing property gifts upon divorce. 

Include property gifts in a marriage contract in Ontario. 

Who Gets the House in a Divorce —

With Children in Canada?

A family court may give divorcing couples options:

• A parent with sole custody may have a legal argument for keeping the house, along with child and marital support to pay the mortgage, property taxes, and upkeep. 
• When custody is shared and parents can’t agree who gets the house, the court may order it sold and the proceeds divided equally.
• The kids could “own” the house (but not the mortgage or property title), while their parents take turns living there on days they have custody. 
• Divorced spouses can live separate and apart in a matrimonial home, essentially sharing it.
• A parent can apply for exclusive possession to force their spouse out until the court finalizes property division. 

Forcing sale of a matrimonial home in Ontario. 

When a Couple is Childless? 

Subject to a family court’s approval, childless couples can agree how to divide assets on their own, or hire a mediator to help draft a memorandum of understanding. The memorandum will then be drafted into a binding agreement by a lawyer. They can sell their home and share the profits equally, or one partner can give up possession in exchange for cash, investments, or other property.  

Why You Need an Ontario Lawyer

Axess Law drafts marriage contracts for families who want to prevent property gifts from being divided during divorce. Tell us your intentions, and we’ll draft a legally binding contract that preserves real property from becoming part of an adult child’s matrimonial assets. 

We meet with couples separately or together to discuss joint tenancy or tenant in common arrangements that determine how assets are divided if they divorce or die. If they have any qualms about signing, we refer couples to lawyers who can provide an independent legal opinion. 

Our Wills and estate lawyers draft personal Wills, or mirror Wills for couples to pass on matrimonial homes if a spouse dies. Right of survivorship applications to remove a deceased spouse from a property title are made simpler when you deal with Axess Law. 

If divorce is inevitable, our licensed divorce lawyers in Greater Toronto Area and Ottawa draft an application for an uncontested divorce. Agreeing ahead of time on property division of matrimonial homes makes arranging a simple or joint divorce so much easier.

Documents We Need 

Bring valid Ontario photo ID, and the nine-digit property identification number (PIN) for a home or land you want to transfer to a family member. Your property  identifier can be found on the property title, available through OnLand, Ontario Land Registry Access. Municipal or provincial tax bills also have your PIN. See the list of primary and secondary ID Axess Law accepts. 

Affordable Real Estate Lawyers, Anywhere You Are 

Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario  when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it. 

Book Remote or In Person Appointments

Axess Law has a real estate lawyer near you. For personal assistance, call our 647-479-0118 lawyer line, or toll free to 1-877-402-4277 toll free. Book remote lawyer or in person appointments in minutes with our easy web form. Axess Law has locations in Greater Toronto Area and Ottawa. 

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