How Are Loans And Gifts Treated In Family Law?

Loans and gifts in a property settlement

Loans and liabilities must be calculated as part of a property settlement, but courts exclude alleged debts that are vague, uncertain or unlikely to be enforced — such as an unsecured loan from a parent.

How significant gifts are treated

Gifts are considered a contribution when dividing property. In one 2018 case, a $1.8 million home gifted by the wife's parents made up nearly 70% of the non-superannuation property pool; the husband still received a 30–35% entitlement, described by the court as fairly generous given the wife's significant financial contribution.

Gifts from parents

Generally, parental gifts to their child are presumed intended for that child alone, and are treated as a contribution to the property pool by that child.

What if a gift was intended for both partners?

If the evidence shows the gift benefited both parties, it counts as an equal contribution from both.

How to protect a gift

Clearly determine whether it's genuinely a gift or a loan, document the intended beneficiary, and consider a financial agreement for large gifts.

Gift vs loan – why it matters

A gift the parties can keep. A loan must be paid back. A loan reduces the available property pool, while a gift increases it.

Is it a loan?

Courts consider written documentation, repayment terms, demands for repayment, and capacity to repay. Unsecured, undocumented family loans are treated with caution — courts are generally hesitant to accept such claims without clear evidence the lender intends to enforce repayment. Repaying an alleged loan after separation can be viewed by the court as an attempt to defeat property pool claims, if the funds were actually a gift.