Donation of an Investment Account: The Quebec Court of Appeal confirms there is no need for a notarial deed of gift!

7 août 2018 | Troy McEachren

( Disponible en anglais seulement )

An ailing parent in the final days of her life wants to give an investment account to her children.   How should she do it? Does she need a notary or can she simply sign a piece of paper? While the question itself is straight-forward, it has never been addressed by Quebec courts, and the answer remained unclear until now. In June of this year, the Court of Appeal confirmed that a simple piece of paper setting out a person’s clear wishes is sufficient to render the gift of an investment account valid.

In Labis v. Labis, 2018 QCCA 992, Lilyan Rotgaus discovered that she was suffering from lung cancer and died just over 60 days later. On March 28, Lilyan signed a document prepared by her son giving instructions to her financial advisor to immediately transfer her investment account to her two children. The same day, the children presented the letter to the financial advisor, opened an investment account in their names and requested the transfer. Ms. Rotgaus died on March 29. At the time that she passed away, the investments had not been transferred. The question became: if the gift wasn’t in the hands of the children before she died, was it still a valid gift?

The Quebec Court of Appeal held that the gift was indeed valid! It was accepted because the securities held in the account in question could be transferred, transacted or sold by way of an order to the broker pursuant to the account agreement. As the order was given to the broker on March 28 (prior to Lilyan’s death), it was valid. There was no need for a notarial document.

This decision is welcomed news for planned givers in the charity community and for planners in the succession planning community as it provides clarity as to the manner in which an investment account can be donated. While it is always prudent to review the account contract to confirm there are no special requirements for a transfer, we can now say with certainty that an investment account can be donated with a simple writing signed by the account owner.

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