How does the Family Court deal with financial gifts?

June 29, 2018

The general rule is that in the absence of evidence to the contrary, the Court will regard a gift to a spouse made by a third party – usually a parent or relative, as a financial contribution made by that spouse, even though the gift may have benefited both spouses in Gosper and Gosper (1987).

What is evidence to contrary? This depends entirely upon the facts. For example, if a parent buys a home for their son but registers the property in joint names with his wife, this may allow the wife to argue that her in-laws intended to make the gift to the both of them.

The question whether a financial benefit is a gift or a loan, will depend on the evidence. The case law suggest that the Court will take into account a range of factors when making this decision. These factors include, but are not limited to:

  • whether there is a written agreement;
  • is there a repayment plan in place?;
  • is interest payable?;
  • have any repayments been made?;
  • has there been a request for repayment?;
  • at what stage of the relationship was the money transferred?;
  • what was the money used for?

The main point to consider is whether to argue the issue at all. For example, if a husband alleges that he received a sum of money as a loan, he then can’t claim the credit of the contribution (because he must repay it). This may favour your claim for property settlement. You therefore might want to concede the point. Early and accurate legal advice on this issue may save you a lot of time and unnecessary legal fees.

Looking for more insights? View all posts.