When is a Loan Really a Loan or a Gift in Your Separation or Divorce in Ontario?

When is a Loan Really a Loan or a Gift in Your Separation or Divorce in Ontario?

What happens when your spouse says that the money that their parents gave them a few years ago must be repaid now when you and your spouse are getting separated or divorced?

Was that money that your spouse’s parents gave to your spouse a gift or a loan?  Can your spouse legitimately put that money down as a debt on their Financial Statement?

Hi, my name is Thomas O’Malley.  I’m an experienced family lawyer in Durham Region and the GTA.

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Ontario family court reviews a number of factors to determine whether money given to a spouse from another family member or friend is a loan or a gift.  These factors include:

1.  Whether there are documents made at the time that the money was given to a spouse showing that this advancement of money was a loan;

2. Whether the manner for repayment of the money is set out or specified;

3. Whether there is security held for the loan;

4. Whether there are advances to one spouse and not other siblings, or advances of unequal amounts to siblings from the parents;

5. Whether there has been any demand for payment before the separation of the spouses;

6. Whether has been any partial or monthly repayments; and

7. Whether there was any expectation, or likelihood, of repayment.

In a recent case, the court found that there was never any expectation, prior to the separation of the spouses, that the spouse would be required to repay any portion of the thousands of dollars that the husband’s parents gave to the spouses over a number of years.

The court concluded that evidence supported the conclusion that the money was provided by way of gift by the husband’s parents.

A spouse cannot suddenly say that money received from other family members is really a loan after a spouse separates from their other spouse unless they can truly show that the money was a loan.

You can show that the money is a loan with a loan document that is prepared at the time that you get the money…not years later when you are getting separated or divorced as well as making regular monthly payments on this loan to the family member who gave you the funds.

If you have any questions about your separation, divorce or family law case and you would like our help, feel free to contact on my Facebook law office page, that’s O’Malley Family Law, or call me at 905-434-8837 and I’ll point in you in the right direction. 

Click here to join my free Facebook GTA and Durham Region separation and divorce support group: GTA and Durham Region Separation and Divorce Support Group

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