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Gifts in Property Settlements

Written by Romana Simic

Romana Simic is a Senior Associate at GTC Lawyers and the Joondalup office manager. She practises primarily in family law. Romana holds a Bachelor of Laws and a Masters in Applied Family Law. Romana initially practiced at a small firm where she gained experience in a wide variety of different areas of law. While she now practices exclusively in family law, she brings to the firm considerable experience in the areas of wills and probate, estate litigation, and commercial law. Romana practices in all areas of family law including property settlements, child-related matters, and binding financial agreements.

The time of year when most of us are engaged in buying gifts for family and loved ones has just passed. Sometimes these gifts will be small such as a nice bottle of wine but sometimes they are generous gifts, like money for the deposit on a house, or a car. This article discusses how the Family Courts have approached different types of gifts in property settlements.

Gifts between spouses

Gifts exchanged between spouses during a marriage or a de facto relationship are generally treated as personal effects in property settlements. As with all other assets and liabilities, the court will look at the value of these gifts at the time of the property settlement, not the insured value or the value when they were bought.

Most of the time these personal effects will be only of modest value and not worth arguing about in the court. They will simply be listed in the Form 13 Financial Statement when the matter proceeds to court. It is important, however, to be clear about what items each spouse will be retaining following separation.

Animals

It is not uncommon for parties to argue about who is going to retain a family pet following separation.

Ordinarily, pets are treated like chattels or other items of property in family law.  The spouse who has purchased and paid for the pet, and whose name the pet is registered in will generally retain the pet.

However, this is not always the case. For example, in case of Downey v Beale the court considered ownership of a dog which the wife argued had been a gift from the husband. The court decided that even though the husband paid for the dog and it was registered in his name, the wife had always been the primary carer for the dog. As such she was able to retain the dog.

Contributions from parents

It is common for parents to assist their children with a deposit for a house. When this occurs, the gift is deemed to be a contribution by the party whose parent the money comes from unless evidence establishes otherwise. This was reiterated in the case of Kessey.

However, in the case of Barton the situation was more complicated. The husband’s aunt gifted the amount of $2.5 million to be put towards a property held in the husband’s name. The court was satisfied on the evidence that even though the property was purchased in the husband’s name only, it was the aunt’s intention that the money be used to benefit both the husband and the wife.

In the case of Gosper, the court made a similar decision. It was satisfied that the gifts by the wife’s father were for the sole benefit of the wife even though the property that was purchased using the money was held in both names.

Gift or Loan?

Another common situation is where a party to a relationship has received a sum of money from a parent and asserts that the money was intended to be a loan and not a gift. The court will need to consider the evidence surrounding the advancement of the funds before deciding whether it was intended to be a loan or a gift. If the court decides the payment was a loan, it will usually be treated as a joint liability to be repaid from the assets pool.

Conclusion

The most common problem associated with gifts in property settlements is the lack of clear evidence of what the giver’s intentions were at the time of gifting. If you are considering loaning money to a family member or borrowing from a family member, it is important to have the agreement properly documented to avoid any disputes should the relationship break down. If money is given, it is important to be aware of the impact of gifts in property settlements.

If you require legal advice or representation in relation to gifts in property settlements or in any other legal matter, please contact Go To Court Lawyers.

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