DECLARATION OF GIFT
I, John McNamee, of the Village of Jasper, in the Province of Ontario, am the owner of 1000 Common Shares in the capital of [Holdco] (the “Property”)
I desire to gift the property to my sons, Trevor McNamee and Clay McNamee, (the “Donees”) in equal proportion.
To carry out my intended purpose, I hereby deliver to each of the Donees a share certificate representing 500 Common Shares in the capital of [Holdco] registered in the name of the Donee.
I acknowledge that it is my intent to vest absolute ownership and title in the Property in the Donee from the date of this declaration.
I hereby direct that the whole of the Property gifted to each Donee, the income arising therefrom, any appreciation in the value thereof, and any property acquired in substitution therefor shall not fall into any community of property which may exist between the Donnee and his spouse, and shall not form part of the net family property of the Donee for any purpose or purposes under the Family Law Act, R.S.O. 1990, c. F.3 and any amendment thereto or any successor legislation thereto, and is given to the Donee on the condition that it shall remain his separate property, free from the control of his spouse. This direction shall apply not only to the Family Law Act, but also to the laws of any other jurisdiction dealing with the distribution of property in the event of death or marriage breakdown.
4(2) The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:
1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.
Clearly on the evidence the intention of John in authorizing and directing the estate freeze was not for the purpose of making a gift to his boys. It was to creditor proof his business and thus better protect the future of his business.
The transfer of the shares was but one step that was necessary for the primary objective to be accomplished.
So long as the main objective was achieved with the requirements he demanded John was less concerned about how the shares were transferred to his sons. This is evident from his testimony when asked why he didn’t sell the shares to the boys. He answered that it was because they didn’t have any money.