Family Law: Gifts vs Loans

It is quite common in a relationship for the people around the two parties (family, friends, business partners etc.) to contribute financially to the either the individual parties or to the relationship as a whole.

 For example, often when a couple gets married, friends and families will give gifts to the couple to help them start their lives together. Alternatively, a couple wishing to buy their first family home may do so with the help of a loan from one or both of the parties’ families. Usually, these gifts and loans present are dealt with privately between the person giving and the person receiving. However when a relationship breaks down, how will gifts and loans be considered?

 Gifts

If you have been gifted a significant amount of money, you do not need to pay that money back. That money is considered a contribution to the relationship. If your family has gifted the relationship with the money, it may be considered as your financial contribution to the relationship. However, the longer the relationship, the less of an impact these contributions have on the division of property because they are incorporated into the joint property pool. Moreover, these contributions are measured against other types of contributions and other factors.

Loans

When you have been loaned a sum of money, you need to pay it back. Loans from banks can be assigned or paid out in a property settlement. Loans from other people or companies can also be transferred or paid out in the property settlement. However, it is important to note that there is a presumption at law that any money given by family to the couple is a gift and not a loan. If your former partner disagrees with your claim that your family’s contribution was a loan (and therefore needs to be repaid), you may be required to prove that it was a loan and not a gift.

 If you have a family law matter, concerns about a loan or gift or questions about family law and separation in NSW and want to find out more please do not hesitate to contact us on 9688 6023 or email us at info@franklegal.com.au.

This article is provided to the reader for general information. It is not legal advice. It was written by Andrea Spencer & Emily Graham and edited by James Frank.

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Family law, Separation, Family Law Lawyer, Financial considerations, financial impact, child support, children