In a 2013 decision by the Family Court, the Court decided that a loan from mother to her son of nearly $2M for the purchase and renovation of a property ‘will ever require repayment’.

2. Family loans – should
they be documented?

3. In a 2013 decision by the Family Court, the Court decided that a loan
from mother to her son of nearly $2M for the purchase and renovation
of a property ‘will ever require repayment’.

4. The effect of that decision was that the $2M was not considered part of
the asset pool to be divided between the then separating parents.
If you are lending money to your family members and expect to be
repaid (not gifted), then it is imperative that the loan be documented
and if possible, even secured.

5. Some of the factors that influenced this decision were that the son had
always been reliant on his family for financial support and that he had
a good and trusting relationship with his mother; the mother’s wealth
was worth in excess of $20M; the mother knew her son couldn’t pay
her back; and the timing of the loan – 9 days after the trial with
settlement 15 days after the trial of the matter.

6. For Legal assistance:
Suzi Cengarle
Mobile: 0404 493 653
Email: suzi@bambricklegal.com.au