Providing financial assistance to adult children
Many older people help their adult children financially, either with a loan, a gift or a conditional arrangement. If your adult child’s marriage or relationship breaks down, a property settlement may arise, and your financial assistance needs to be considered in the settlement. Suddenly, parents are left asking: “will I get my money back?” or “do I get a say in what happens next?”.
Understanding how parental contributions are treated in property settlements is critical to protecting your position and avoiding costly and unexpected outcomes. When relationships break down, money provided by parents often becomes a point of dispute, and assumptions made years earlier can be challenged.
To properly understand your legal position, it must be clear what your intention was when you provided money or support, and what both parties understood and agreed at the time. Without that clarity, funds that were intended to be repaid or protected may be treated as a gift and absorbed into the property pool.
Good records matter
Many parents later say, “We didn’t write anything down — we trusted them.” Unfortunately, in a property settlement, trust is not evidence.
Clear records can significantly reduce the risk of dispute and strengthen your position if your contribution is questioned. Relevant documents may include bank statements, receipts for renovations or household expenses, emails or text messages, notes made after discussions, and any written agreement — even an informal one.
Small pieces of written information, taken together, can be critical in establishing whether money was intended as a loan, a gift, or a conditional contribution, and in avoiding expensive and emotionally draining litigation.
If family law proceedings have started
Once family law proceedings are underway, a property settlement can be finalised without regard to your contribution unless the Court is formally notified. If this occurs, you may lose the opportunity to recover the funds you provided or to have your interests properly considered.
A lawyer can assist you to notify the Court of your involvement, seek to be included in the proceedings where appropriate, and take steps to protect your position before binding decisions are made. Early advice is critical.
Best practice
Providing financial assistance without documenting the arrangement carries significant risk. If a relationship breaks down, informal loans or gifts are often disputed and may be treated as contributions to the couple’s asset pool, rather than money repayable to you.
Having a clear, written agreement in place from the outset significantly reduces the risk of uncertainty, conflict, and financial loss. It allows expectations to be managed early and provides a clear framework for what is to occur if circumstances change.
Our experienced lawyers can help you put appropriate agreements in place to protect your financial position and minimise the risk of costly disputes, while also helping to preserve family relationships where possible.
