Family Court

Is it a gift or a loan? How gifts and loans are treated in family law matters

It is not uncommon for parents of a child to give their child a gift of money to purchase a property with their spouse/de facto partner, only to have their children separate after the purchase of the property.

 

How does the Family Court/Federal Circuit Court treat gifts and loans in family law matters when the parties have separated?

 

Generally, it depends on a number of factors such as:

 

  1. Was the gift made to both parties or to one person? If it was made to one person then it is likely that the gift would be considered a contribution on the part of that person to the relationship;
  2. How long ago was the gift given? The older the gift, the less weight is attributed to it in assessing contributions of the parties to the asset pool;
  3. Is there evidence of an intention for what the gift is for? It is recommended that along with the gift there is a letter or a note in writing stating what the gift should be used for. Keep a copy of it for your records;Is it a loan instead of a gift?
  4. If it is a loan which is repayable from the child to the parent, it is advisable to have a loan agreement or a financial agreement between the parents, the child and their spouse/de facto partner, stating the terms of what the repayments would be, when the final payment should be etc.

 

Some spouses/de facto partners have claimed that monies provided to them by their parents are a loan and therefore it is a liability instead of an asset. Generally these “loans” are repayable “on call”, but in reality, the parents would not expect repayment of these “loans” from their children.

 

The Court may not accept that a “loan” is a genuine loan unless it is properly documented and there is some evidence of repayment and security for the loan.

 

Speak with one of our lawyers today to enquire about your options on how to protect your gifts to your children!

 

This article provides information that is general in nature and is not a substitute for legal advice.

Will you have access to your children during the holidays?

School holidays are fast approaching. Have you finalised your parental access agreements with the other parent[s] of your children? If not, you must apply for a Parenting Order in relation to the whole, or part of the school holiday period – beginning in December, in a year [the application year] and extending to January the following year.

The application must be filed at the Family Court/Federal Circuit Court before 4.00pm on the second Friday in November of the application year i.e. before 13 November 2015 for this year.

 

If you fail to file an application for access to your children over the Christmas period, the court will not hear your application until after the Christmas period.

 

A verbal agreement or an informal agreement in writing may not be enough.

We advise people to obtain an order of the court – rather than a parenting plan.

Unfortunately, email and text agreement are not enforceable.  If you do not have children’s orders with the court, the other parent can change their mind the day before Christmas – without any recrimination.

If you are no longer living with the other parent – always obtain court orders that set out the arrangements for you to spend time with your children.

 

Protect your time with your Children

We recently completed a case where the parents separated while their child was one year old. The case finished when the child was 11 years of age.

As a result of the mother’s continual breaches of the conditions of the order during the past 11 years, the court ordered the child to live with the father.

If those orders were not in place, the father would have no basis for asking the court to order the child to live with him.

The father also kept written records of all breaches [in a diary] of the orders and that evidence was crucial in supporting his case.

If you’ve separated from the parent[s] of your children and you want to spend time with your children, we can help you negotiate parenting orders with the other party. Speak with us today.