Latest insights from our experts

Posted 27 November 2019
by Tracy Lambert

Parental Financial Support



We know that parents continue to support their children long after they reach the age of 18 and after any legal obligations for child maintenance have ceased. This is in the form of assistance with university accommodation, rental deposits and bailing them out from time to time when they are in debt or difficult situations.

Recently we are seeing more cases where parents have assisted their children with either “gifts” or “loans” to buy their first and or subsequent homes. If that purchase is made jointly with another party whether that is a cohabitee or a spouse it can become tricky if that relationship subsequently breaks down. Such gifts or loans are very rarely documented and how those contributions come to be regarded by the parties often causes huge problems and leads to expensive litigation.

There are more cases where parents are being invited to intervene in their children’s divorce proceedings in order to unravel the claims for repayment of monies loaned at an earlier date to facilitate the purchase of property.

We would encourage any parent thinking of providing financial assistance to their adult children to look at formalising the arrangement. If there is any issue at a later date it is going to be much easier to resolve if there is proper documentary evidence confirming the nature of the gift or loan. For example, if it is a gift to their child and not their child’s partner then a written document should say so. Similarly, if it is a loan with an expectation of repayment a contract should be drawn up to reflect this. Consider securing a legal charge against the property to ensure that upon sale the funds are repaid.

There are also steps that parents could suggest that their children take to try and ensure that the source of the funds are protected if at a future date the relationship breaks down, for example there could be a cohabitation agreement drawn up to reflect the contributions made by the couple at the outset and what should happen in the event of subsequent separation or sale of the property.

Likewise, for couples intending to marry a prenuptial agreement could include consideration of the position and an expectation that funds brought by one party into the marriage should be retained by them in the event of any subsequent breakdown.

It seems that this is an area of increasing dispute and we would advise any parents to consider matters carefully before providing financial assistance.

If you would like to discuss any of the issues raised in this article then please contact a member of the family team on 01392 207020 or email enquiries@tozers.co.uk

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About the author

Tracy Lambert

Partner and Solicitor

Partner based in Exeter's family team