What is a Gift Declaration?

A Gift Declaration (also called a Gift Letter or a Gift Deed) is a formal, written statement confirming that funds or assets given to someone are a true gift and not a loan.

Its purpose is to reassure third parties such as mortgage lenders, government agencies, or courts that:

• The money is legitimate.
• The recipient has no obligation to repay it.

📌 When Do You Need One?

Not every gift requires a declaration. A birthday cheque or holiday present does not need paperwork. But in high-stakes financial situations, a declaration may be essential:

1. Mortgage Applications
   • Lenders require a gift letter if gifted funds are used as a down payment.
   • Why? Because they calculate your Debt-to-Income ratio. If they suspect the “gift” is actually a loan, it counts as debt and could disqualify you.
2. Estate Planning & Large Transfers
   • A declaration or gift deed clarifies intent when giving significant sums as early inheritance or financial support.
   • If the donor passes away, it prevents disputes over whether the money was a loan to be repaid to the estate.
3. Divorce or Separation Protection
   • In many jurisdictions, gifts to one individual are considered excluded property (not divided during divorce).
   • A declaration proves the funds or assets were intended solely for you, protecting your assets.
4. Tax Audits
   • Large deposits can trigger red flags with tax authorities.
   • A gift declaration provides proof that the funds are gifts and may not be taxable (subject to local tax laws).
5. Immigration
   • Large deposits without explanation can lead to the rejection of your visa or PR application
   • A gift declaration proves the source of the funds and confirms that the funds belong to the recipient.

📝 What Your Gift Declaration Must Include

To be legally effective and accepted by banks, your declaration should include:

Section	What to Include
Donor Details	Full name, address, phone number, and email of the person giving the gift.
Recipient Details	Full name of the person receiving the gift.
Relationship	Explicitly state the relationship (e.g., "Mother," "Brother"). Note: Many lenders only accept gifts from immediate family.
Gift Amount	The exact dollar amount (e.g., "$15,000.00").
The "No Repayment" Clause	Crucial: You must include a sentence stating: "No repayment is expected or implied, either in the form of cash or future services."
Property Address	If the gift is for a house, include the full address of the property being purchased.
Source of Funds	Bank and account details where the money originates. Lenders often verify this. (Lenders often ask for bank statements to match this.)
Signatures	Signatures of both the Donor and the Recipient, and the date of signing.

🔒 Why Should a Gift Declaration Be Notarized?

While some lenders may accept a standard letter, notarization adds an extra layer of protection. Here’s why it matters:

1. Authenticity & Lender Confidence
   • Notarization verifies the signer’s identity.
   • Prevents disputes over forgery or unauthorized signatures.
   • Many banks require notarized gift letters to prevent fraud.
2. Self-Authenticating Evidence in Court
   • A notarized document is considered self-authenticating.
   • If challenged, the notary’s seal itself proves validity—no need for extra testimony.
3. Protection Against “Change of Heart”
   • Family dynamics can shift. A notarized declaration stating “no repayment is expected” is your strongest defence if someone later demands repayment.

⚖️ Final Word: A Small Step for Big Peace of Mind

When transferring large sums, do not rely on a handshake. A properly drafted and notarized gift declaration can save you from mortgage rejection today or a courtroom battle tomorrow.

At NotaryServe®, we help clients prepare and notarize gift declarations that meet lender, IRCC, and legal requirements, giving you peace of mind and protecting your financial future.

👉 Next Step for You:
If you are preparing a gift letter for a mortgage, visa application or other purpose, NotaryServe® can help draft a formal, compliant declaration tailored to your situation.

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Email: contact@notaryserve.ca
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