Most parents say gift. Most lawyers say get it in writing as a loan.

They’re not disagreeing about generosity. They’re answering two different questions. The parent is answering do we expect to be repaid? And often, honestly, no. In 2021, one in three parents who helped a child buy property didn’t expect the money back. By 2025 it was three in four, according to Mozo’s Bank of Mum and Dad survey. Only 3% now expect to be repaid in full with interest.

The lawyer is answering what protects the family if something goes wrong? On that question, an undocumented gift is the most exposed position there is, and it’s the position most families are in by default. Money.com.au’s 2026 survey found that among first-home buyers who’d had family help, only about a third (36%) had a legally binding written agreement with their parents.

With no written agreement, money from a parent to a child is often treated as a gift. If your child separates from a partner, it usually stays in the shared property pool. It may count as a contribution on your child’s behalf, but it’s weighed alongside everything else, and as a gift you generally can’t ask for it back.

That is the part most families never picture. You didn’t mean to fund part of a property settlement; you meant to help your child buy a home. A document signed at the time is the clearest record of what you meant, and it costs a fraction of the amount it protects.

Most of the time, it doesn’t. Plenty of families hand over a deposit on a handshake and never think about it again. The catch is that nobody knows in advance which arrangements will be tested. The ABS recorded 49,158 divorces in Australia in 2025, and that figure only counts marriages.

When an informal arrangement does come undone, it tends to happen in one of four places:

• The law starts from “gift”. Australian law has a long-standing starting point, called the presumption of advancement, that money a parent gives a child is 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. An informal arrangement leaves very little.
• The loan nobody wrote down. Many parents think of their help as a loan they’ll sort out later. A spoken loan can still be proved, but it’s much harder, and parents can end up giving evidence about a conversation from years earlier. Often the money is treated as a gift.
• A separation looks at the whole picture. Since family law changes took effect in June 2025, courts work through set steps: identify the couple’s property and debts, weigh what each person contributed, consider their future needs, then make an order that’s just and equitable. Your gift is one contribution among many, and its weight can lessen over a long relationship.
• A loan on paper that never acts like one. A 2026 Full Court decision confirmed that a documented family loan isn’t automatically deducted from the pool. If it was never likely to be repaid or called in, a court can discount it.

Writing something down only helps if it answers the question. Among the families in Money.com.au’s survey who did have a formal agreement, fewer than half (46%) said whether the money was a gift or a loan. None of this needs anyone to act in bad faith. It only needs a gap between what the family meant and what anyone can show.

A properly drafted loan deed records that the money is repayable, on stated terms. In a property settlement, a genuine, documented loan can be treated as a debt owed by the couple. That reduces what’s available to divide, and improves the chance the family money finds its way back to the family.

The important word is genuine. Courts look at whether it looks and runs like a real loan: written terms, interest or security, whether any repayments were made or asked for, and whether your will forgives it. It helps if both partners sign, and if there’s a record of how the loan has been run since.

That doesn’t have to mean monthly repayments. A family loan can be written to be repayable only on sale, or when you ask for it. But it does need to be a loan you’d genuinely be entitled to call in, and the paperwork has to exist before the money moves rather than after something has gone wrong.

Sometimes it is. If your child is single, if you can comfortably afford to give the money away for good, and if you want it clean for their borrowing, a documented gift may be exactly right.

The point isn’t “always loan”. It’s to decide deliberately, and put it in writing either way. A lender will usually want a gift confirmed in writing too, typically a signed letter saying the money doesn’t have to be repaid, so the paperwork is rarely optional even when the answer is gift.

What you want to avoid is the third option: money that moved on a conversation, with nobody able to say afterwards which of the two it was.

In plain terms: who’s lending, who’s borrowing, how much, whether interest applies, when (or whether) it’s repayable, and what happens on sale or separation.

It’s not a long document. But it has to be right, and it has to be in place before the money moves. Getting it drawn up a fortnight early is straightforward; sorting it out afterwards is a different job. That’s where a lawyer from our network earns their fee.

The right answer for your family turns on details no article can see: how much you’re giving, whether your child is buying alone or with a partner, how their lender will treat a loan, whether you might need some of the money back for your own retirement, and whether there are other children to think about.

That’s the conversation we have with you. It’s free and confidential, and we reply within 24 hours. On the call we help you work out:

• whether a gift, a loan or something in between matches what you actually intend
• how each option is likely to sit with your child’s lender
• what needs to be written down, and who should sign it
• what to decide, and in what order, before any money moves

When it’s time to put it on paper, we introduce you to a family lawyer from our network who can draw up the loan deed or gift documentation, so you’re not choosing one cold.

It’s free for you because the specialists we introduce may pay us a referral fee if you decide to work with them. That never costs you anything, and it never changes who we recommend. You don’t need paperwork or numbers ready, just a rough idea of what you’re planning.

Tell us what you’re thinking of giving→