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Document your gifts properly

Many parents want to make gifts to their children while they are alive, and when their children need the money.

However, unless these gifts are properly documented, if one child receives more than the other child(ren), gifts can cause many disputes and lasting bitterness.

Is it is a loan or a gift?

It is very important to document whether you are giving something to a child (no right or expectation to receive it back) or making a loan (an expectation of repayment).

If it is a gift, put it in writing.

If it is a loan, put it in writing.

Consider equalization on death

A common planning objective is to ensure that all children receive an equal amount from their parent(s), taking in to consideration amounts received both before and after death.

A common clause in wills – called a ‘hotchpot clause’ – is expressly designed to ensure that gifts and loans and bequests are equalized amoung children properly.

Consider making gifts now

An important component of estate planning is determining whether you want to make some gifts now, while you are still alive.

Common gifts include donations to charities, and gifts to children and grandchildren to support their educations or purchase homes.

Gifting now has pros and cons, although on balance we believe that many more people should consider making modest inter vivos gifts now rather than waiting.


  • The gift gets put to work immediately – addresses the current need of the recipient.
  • You have certainty that the gift is received as intended.
  • You see your gift in action, and the recipient has an opportunity to thank you personally.


  • A gift will reduce your assets. This may be a concern if you are uncertain about your ability to meet your own financial needs.
  • May cause jealously or complaints
  • Difficult to do anonymously
  • Unless documented properly, gifts and loans can cause disputes and litigation
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