Morgan Chawla- Financial gifts from family members: is it shared after separation? Published October 23, 2025.
Property values in B.C. are some of the highest in the world. Many people rely on the financial assistants of parents or other family members to help them with a down payment. The intention is always to help a family own a home and grow their family. However, families rarely consider what may happen to these funds if the parties separate.
What happens to these large sums of money if the people who received it no longer wish to remain together? Was it a gift to both people or just one? This problem has troubled lawyers and courts for decades. Sometimes these gifts would be considered common property and be divided equally upon separation, and sometimes it would be returned to one spouse alone. This situation often led to inconsistent outcomes, uncertainty, and costly litigation.
In 2023, a pivotal legislative amendment now clarifies the law: such contributions are no longer presumed gifts, changing both planning and litigation strategies. With section 81.1 in effect since May 11, 2023, the Family Law Act expressly rejects the presumption of advancement in spouse-to-spouse property transfers. By removing the presumption of advancement and confirming that excluded property retains its character even after being transferred between spouses, the government sought to better align the law with the intent of contributors, preserve family wealth, and reduce the burden on courts and families navigating separation.
Legislative Framework — Family Law Act (FLA)
Excluded Property Provisions
Under section 85 of the Family Law Act, SBC 2011, c 25, “excluded property” includes:
- Property acquired before the relationship began;
- Inheritances;
- Gifts from third parties;
- Property derived from any of the above.
Importantly, section 85(3) confirms that even if a gift was shared or transferred between spouses, it will still be considered the excluded property of one spouse.
Practical implications:
- Spouses using inheritance or third-party gifts to acquire property—even if held in the other’s name or jointly—can now more confidently preserve exclusion, provided proper tracing documentation exists.
- Courts will no longer rely on inferences about intent to characterize such transfers as gifts.
- However, for relationships or proceedings initiated before May 11, 2023, old case law remains potentially operative.
Practical Tips
- Maintain detailed records tracing funds from source to property purchase.
- Use clear agreements (e.g., cohabitation or marriage agreements) to define treatment of such funds and property.
- Consider this shift in the law for couples with cohabitation or marriage agreements made prior to 2023.
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