A man has expressed concerns about what happens to his gift to his son if his relationship breaks down. ·Source: Getty
Welcome to Yahoo Finance’s legal column where lawyers Alison and Jillian Barrett from Maurice Blackburn tackle problems everyday Aussies face — whether it be consumer, property, money matters impacting relationships or work. This week, a father’s concerned about a financial leg up he gave his son to get on the property ladder.
Question
My son built a house on land we gave him funds to buy. When it was completed, he and his girlfriend moved in. They have lived in the house together now for several years. If their relationship broke down would she be entitled to any settlement from the property? She contributes with the usual living expenses while he pays his mortgage. Could our gift contribution be included in a settlement payout if there was one?
Answer
Navigating property settlements following the breakdown of a relationship can be a complex and emotionally charged process. Hopefully, your son never needs to tackle this.
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In Australia, de facto couples have similar rights and obligations as married couples when it comes to property settlement. According to the Family Law Act 1975, a de facto relationship is defined as a relationship between two people who are not married to each other but live together on a genuine domestic basis.
Given that your son and his girlfriend have lived together for over four years, their relationship would likely be considered de facto under Australian law.
If their relationship breaks down, either party can apply for a property settlement.
The court will consider various factors to determine the division of property, including the duration of the relationship, the financial and non-financial contributions made by each party, the future needs of each party, and the care and support of any children from the relationship.
A precise formula isn’t applied (or a 50/50 split), it depends on the circumstances of the case.
In your son’s case, his girlfriend’s contributions to the usual living expenses and the fact that they have lived together for over four years would be taken into account.
If her financial contributions were intended to be rent and there is documentation to support this, then it could influence the property settlement.
However, in most de facto relationships, contributions towards living expenses are viewed as part of the couple’s shared financial responsibilities rather than a formal rental agreement.
Alison and Jillian Barrett are Principal Lawyers at Australia’s leading plaintiff law firm, Maurice Blackburn. ·William Gordon Photography
Any non-financial contributions she has made to the property would also be considered. For example, perhaps she assisted with painting the home or performed homemaking duties.
Your son’s contributions would also be considered, including the mortgage repayments and initial purchase costs.
The court would assess both parties’ contributions and may determine that his girlfriend is entitled to a portion of the property. If the value of the property has increased since it was built, that too is likely relevant when assessing her entitlement.
Your financial contribution to the purchase of the land and the construction of the house could be considered in a property settlement.
The court would look at the source of the funds and the intention behind the gift. If it was intended as a gift to your son alone, this could be argued.
If you have clear documentation of the gift and any agreements made at the time of the contribution it may influence the court’s decision in a property settlement. Without this, it may be difficult.
The best option in this situation is for your son to immediately seek legal advice and explore a binding financial agreement.
Properly drafted, this is a legally enforceable agreement between your son and his girlfriend that can be made at any time during a relationship.
It outlines in significant detail how property and assets will be divided in the event of a relationship breakdown and also deals with things like spousal maintenance. The financial contribution you made to the property can also be provisioned for in the agreement.
This legal information is general in nature and should not be regarded as specific legal advice. If you need legal advice, you should consult a solicitor.
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