• When money is given that is neither loan nor a gift

    Posted on January 18, 2012 at 5:57 pm under Family Law category.

    I was just reading a recent decision from the Federal Magistrates Court where a father had provided to a couple $240,000 and sought to have the money repaid after the parties had separated.

    This is often an issue which arises in my office when advising a party. Parents will often provide and at times very significant sums of money to assist young couples starting off.

    In this particular case it was used to purchase a home.

    There was no documentary evidence that it was a loan however the father was so adamant that he wanted to be repaid that he actually joined in the proceedings in his Son’s matrimonial proceedings.

    He was unsuccessful.

    The Magistrate said that in his opinion “the complete absence of a term for repayment or a mechanism for it to occur means that the ultimate characterisation of the advances is that they are not repayable. They were repayable at will”.

    It is a timely reminder that when making advances to family members that they should be properly documented and at times such loans should be registered over property that may be bought by the recipient.

    Stephen