Giving your children gifts is part of being a parent. But, as your children grow into adults, the receipt of such gifts may create potential implications for spousal and child support obligations.
We are talking specifically about gifts of money. Of course, we all understand that such financial gifts are entirely voluntary – but that does not mean that they come without consequence. Some gifts of this kind may constitute imputed income for the purposes of determining support obligations.
In Horowitz v Nightingale, the court decided exactly that. After sixteen years of marriage, a husband and wife separated. At the time of separation the pair had three minor children with special needs. During the course of the marriage, the father’s parents provided the family with financial gifts to supplement the household income (as only one parent was working). These gifts ranged from $10,000 annually at first, eventually increasing to $50,000 annually.
The mother argued that these regular financial gifts ought to be included in the father’s income for the purpose of determining spousal and child support. This proposition was ultimately accepted by the court, despite the fact that there was no ongoing obligation for the parents to continue giving such gifts.
The court noted that gifts are not to be included in income at first – but that it has discretion to impute income as it sees appropriate in the circumstance. To this end, the court indicated that usual gifts – those given on birthdays, anniversaries, etc. – are not included as income. Rather, the court will consider factors such as the regularity of the gift, duration of its receipt, whether the gift was part of the family’s income, whether it was paid to support a child with a disability, whether the gift is likely to continue, and the true nature of the gift, to name a few.
As is often the case in family law, the court will weigh all the factors and determine whether it is appropriate to include the gifts as income. Gifts of money given to celebrate common life events (like birthdays) will not likely have consequences for support obligations. But beware of gifts that are given out of the ordinary course, with some semblance of regularity. These are the gifts that may form the basis for increasing the quantum of support obligations.