In most situations, it's clear when a charitable gift takes
effect. But in cases where the donor places a condition or
restriction on a gift, it can be more difficult to determine when
the gift became effective. This was the issue before the
British Columbia Court of Appeal in its recently released decision
Norman Estate v. Watch Tower Bible and Tract Society of Canada.
In the case, the Court had to decide whether a conditional gift
made to a registered charity was an inter vivos gift
(meaning it took effect during the lifetime of the donors) or
whether it was testamentary in nature (meaning the gift
was only effective on the death of the donors).
The donors, Lily and Lloyd Norman (the "Normans"),
frequently donated money to the Watch Tower Bible and Tract Society
of Canada (the "Society"). However, one of their gifts
(for $200,000) included a letter referring to the donation as a
loan and specifying that all or a portion of the donation should be
returned to the Normans, at their request. The letter also provided
that after the death of the Normans, the Society would be entitled
to keep the funds. The Society confirmed this arrangement with the
Normans in writing by sending them a "Conditional Donation
Agreement" (the "Agreement") which was signed by the
The Normans never requested the return of the donation during
their lifetime. After the death of Lloyd (Lily had predeceased
him), the Society issued a charitable donation receipt with respect
to the donated funds. However, Lloyd's estate (the
"Estate") claimed that the Society was not entitled to
the funds. The Estate argued that since the Normans could compel
the Society to return the funds during their lifetimes, the
Agreement was testamentary in nature, and therefore had to meet the
formal execution requirements in the Wills Act to be valid
(which it did not). The Society argued that the Agreement created
an inter vivos trust, which provided the Society with an immediate
interest in the donation.
The BC Court of Appeal agreed with the trial judge and dismissed
the appeal. The gift was not testamentary in nature because the
Normans made the gift during their lifetime with the intent that
the gift would be effective immediately. The fact that the
Normans had the power to require the return of the funds meant the
gift was subject to a condition, but the Society still had an
immediate interest in the donation. Further, the court noted that
since the Normans did not have the power to take back or amend the
Agreement itself, any refund request had to be in accordance with
the terms of the Agreement, which indicated that the Agreement had
immediate effect. Accordingly, the Society was entitled to keep the
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It is not uncommon for parents to provide monetary gifts to their adult children. Parents may wish to help their child with a down payment on a property, or help pay out their child's existing mortgage.
On March 31, 2014, BC's new Wills, Estates and Succession Act1 ("WESA") will come into force. WESA introduces new protections for beneficiaries of estates that are in danger of being disputed or deemed ineffective by a court.
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