The question every lawyer says you should have asked first.

It isn’t a comfortable question. But the answer is set early (often years before anything goes wrong), and it usually comes down to a single fact: was your parents’ contribution documented, or not? Asking it now isn’t pessimism about your relationship. It is the most considerate thing you can do for the people who helped.

Most relationships last, and yours probably will. But it’s a fair question to plan for. The ABS recorded 49,158 divorces in Australia in 2025, and for marriages that ended, the median time from wedding to separation was 9.4 years. That’s well inside the life of a 30-year home loan, and long after anyone remembers exactly what was said about the deposit.

If a couple separates, the court looks at the property and debts, what each person contributed, and each person’s future needs. Family law reforms that started in June 2025 now set those steps out in the legislation, but the question for family money is the same: where does your parents’ contribution sit in that picture? Mostly, it depends on how it was structured.

A genuine, well-documented loan may be treated as a debt the couple owes your parents, which reduces the pool before it’s divided. Courts look at substance, though, not just paperwork. A 2026 Full Court decision confirmed that a documented family loan isn’t automatically deducted, so a “loan” that was never likely to be repaid can be discounted. An undocumented gift usually counts as a contribution made on behalf of the parents’ own child. That can weigh in your favour, but the money stays in the pool and is weighed alongside everything else, so it isn’t protected in the way families often assume.

Same $60,000, same parents. Documented and run as a loan, it has a better chance of going back to them. Left as a vague gift, it stays in the pool to be divided.

Australian law has a long-standing starting point, called the presumption of advancement: money a parent gives a child is assumed to be a gift unless the evidence shows otherwise. Courts look first at what everyone actually intended, so the presumption matters most when there’s little evidence either way. In other words, silence tends to favour “gift”, and for your parents a gift is the hardest structure to get back. A signed loan agreement made at the time, and followed in practice, is the clearest evidence of a loan.

Silence is also the norm. Money.com.au’s 2026 survey found that 64% of first-home buyers who had family help had no formal written agreement with their parents. Even where families did put something in writing, only 39% of those agreements said what happens to the money if the buyer separates. If that’s you, you’re in the majority, and it’s fixable.

A properly drafted loan deed records that the money is a loan, repayable to your parents, and on what terms. In a settlement, a genuine documented debt can be accounted for before the remaining pool is divided, which is the protection an undocumented gift lacks. It works best when it’s signed before the money moves, signed by both of you if you’re buying together, and actually followed, with a record of any repayments.

It protects your parents, and it keeps the family money in the family. Whether a deed is right for your situation depends on the facts, and getting one done properly is a job for a lawyer.

The awkward version of this conversation happens behind someone’s back: parents quietly asking a lawyer to “protect” the money, or one partner agreeing terms the other never heard about. The easier version is open. You, your partner and your parents agree what the money is, and everyone knows where they stand.

Putting family money in writing says nothing about how you feel about your partner. It’s a normal, grown-up step, much like deciding whose names go on the title. It protects the two of you as well: if your partner knows from day one that $60,000 is a loan from your parents, it never turns into a surprise later.

A few things help:

• Raise it early, before you make an offer, as a question for both of you rather than a condition from your parents.
• Have the conversation with your parents together, so the terms are something you agreed as a couple.
• If your partner, or their family, is putting money in too, talk about that as well. The same questions apply on both sides.

It’s not too late, and it’s a common position to be in. There are steps that can help formalise an arrangement after the fact, though they work best the sooner they’re done and always depend on your circumstances. Courts look more sceptically at paperwork created after the event, particularly once a relationship is under strain, so it’s better done while everyone is on good terms and backed by how the arrangement is actually run. Depending on your situation, a lawyer might suggest a written acknowledgement of the loan signed by both of you, or a binding financial agreement between you and your partner.

The worst option is to assume it will sort itself out.

How your parents’ money should be recorded depends on details no article can see: whether it’s a gift, a loan or something in between, whose names are on the title, whether you’re married or de facto, what your lender needs, and whether the money has already gone in.

That’s what a conversation with Fledge is for. It’s free and confidential, you don’t need paperwork or numbers ready, and we come back to you within 24 hours. We look at the whole picture with you, including:

• how the contribution is set up now, and what that could mean if you separated
• what your lender will want to see, and how a loan might affect your borrowing
• how to raise it with your partner and your parents as one open conversation
• what to put in writing, and in what order, before any more money moves

You leave knowing what matters in your situation and what to decide first. When it’s time for a loan deed or a financial agreement, we introduce you to the right family lawyer, and to a mortgage broker if the lending side needs attention too.

It’s free because specialists may pay us a referral fee if you choose to work with them. That never costs you anything, and it never changes who we recommend.

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