Parents never stop parenting. That phrase has been around for a long time and can usually be heard when a group of parents get together. The phrase, however, seems more applicable today due to the economic realities many Medicine Hat families are facing.  Adult children living at home and/or parents advancing money to their children to help with expenses are very common occurrences. In deciding to help a child it is important to consider how that decision will be viewed by your other children when your estate is being administered. If the decision does not take into account your estate plan, the advance of money to a particular child may have the effect of creating a family dispute. This is very unfortunate, especially in families where everyone gets along.

Was the money advanced to a child intended to be a gift or a loan? This is a simple question to answer if everyone is in agreement on what the parent’s intention was at the time the advance was made. If there is no agreement, then one has to look at the circumstances surrounding the advance. The law presumes the advance is a loan which must be taken into account on the estate distribution. In effect, repayment of the loan would be considered an estate asset and the money advanced would be considered an advance on that child’s share of the estate.   It is up to the child receiving the money to show the advance was a gift and was not to be considered as an advance on their share of the estate. If there is nothing in writing to confirm the parent’s intention, the potential is there for a family dispute.

There is a simple way to resolve the situation. At the time the advance is made, the parent and child should confirm the parent’s intention in writing. If it is a gift, an Acknowledgement of Gift can be signed and left with their respective estate planning documents. If it is a loan, a loan agreement can be signed confirming the terms of the loan.  These documents will make it easy for your family to confirm your intentions and avoid a dispute about your intentions.  These documents can also be referred to if your child and their spouse have a marital breakdown. Gifts and loans are treated differently under the Matrimonial Property Act; however, that topic is beyond the scope of this article.

If is also possible to confirm your intentions in your Will.  A clause can be included to indicate any advances made to your child or children during your lifetime are not to be included in determining a child’s share or your estate. Alternatively, a clause can be included to indicate any advances made to your child or children during your lifetime are to be included in the child’s share of your estate.

Once we have lost mental capacity or died, we cannot confirm our intentions about monies or property advanced to our children. A gift document, loan document or clauses in your Will, will avoid a family dispute and ensure your wishes are carried out.