When a separation happens, or even when the proceedings have just started, determining how property and financial interests should be divided becomes the critical part. A property settlement involves more than simply considering who paid for a particular asset. Contributions made during a relationship can take different forms, including financial contributions, homemaker, parenting, and contributions towards the maintenance or improvement of property.
This can become particularly relevant where parents have provided financial assistance or ongoing practical support to one or both parties during the relationship. Such contributions may include helping with a property purchase, contributing towards expenses, providing childcare, or assisting with property improvements.
Understanding how these contributions may be considered can help provide greater clarity about your position during a family law property settlement. The way contributions are assessed will depend on the circumstances of the relationship, the nature and extent of the contributions, and the overall circumstances of the parties.
What Is a Family Law Property Settlement?
A property settlement involves determining how the property, liabilities, and financial resources of separating or divorcing parties should be dealt with following the breakdown of their relationship.
The property pool may include:
- The family home
- Investment properties
- Bank accounts and savings
- Shares and other investments
- Business interests
- Superannuation
- Vehicles and valuable personal property
- Debts and other liabilities
When determining a property settlement, the court may consider the contributions made by each party throughout the relationship.
These contributions are not limited to money.
Financial support provided by parents, unpaid care provided within the household, and work undertaken to maintain or improve an asset may also be relevant depending on the circumstances.
How Financial Contributions from the Parents of one of the Party’s Can Impact a Property Settlement?
Parents may provide financial assistance to their adult children in a number of ways. For example, they may contribute towards a house deposit, help with mortgage repayments, provide money for renovations, or lend funds to help purchase an investment property.
Whether such assistance affects a property settlement can depend on the nature of the contribution and the circumstances in which it was provided.
1. Helping With a House Deposit
Parents may provide money to help their child purchase a family home.
The contribution could be a gift, a loan, or part of an informal financial arrangement between family members. The way the payment was intended to operate may become relevant if the parties later separate.
How do lawyers help in this?
Family lawyers can review available financial records and documentation to help determine the nature of the contribution and how it may be relevant to the property settlement.
2. Paying Towards Mortgage or Property Expenses
Parents may also contribute towards mortgage repayments, rates, renovations, or other expenses associated with a property.
These payments may form part of the broader financial history of the relationship and may need to be considered alongside the contributions made by both parties.
How do lawyers help in this?
Lawyers can help identify relevant payments and consider how they fit within the overall financial circumstances of the parties.
3. Providing a Loan to the Couple
A parent may provide money with the expectation that it will eventually be repaid.
This can create a different situation from a genuine gift. However, simply describing money as a loan does not necessarily resolve the issue. The surrounding circumstances and available evidence may be important in determining how the arrangement should be treated.
How do lawyers help in this?
A family lawyer can review documents, payment records, communications, and other relevant information to help establish the nature of the financial arrangement.
4. Funding Property Improvements
Parents may provide money or materials for renovations, extensions, repairs, or other improvements to a property.
The contribution may be financial, but it can also involve practical assistance. For example, a parent may personally carry out renovation work or provide skilled labour without receiving payment.
How do lawyers help in this?
Lawyers can help identify and document relevant contributions and explain how they may be considered as part of the broader property settlement process.
Can Non-Financial Contributions From Parents Be Relevant?
Not all contributions involve direct payments.
Parents may provide practical assistance during a relationship that has financial value or allows the parties to meet other responsibilities. For example, grandparents may regularly care for children while the parents work, or a parent may help with renovations or household responsibilities.
These circumstances can be relevant when considering the overall contributions made during a relationship, although the significance of any particular contribution will depend on the facts of the case.
1. Providing Childcare
Parents or grandparents may provide regular childcare that allows one or both parties to work, study, or manage other responsibilities.
This assistance can be particularly significant where it reduces the need for paid childcare or enables a parent to maintain employment.
How do lawyers help in this?
Family lawyers can help identify the nature and extent of the assistance and explain how it may fit within the broader circumstances considered in a property settlement.
2. Helping With Household Responsibilities
A parent may provide ongoing assistance with household tasks, childcare, transport, or other responsibilities.
While these contributions may not involve money changing hands, they can provide practical support to the household.
How do lawyers help in this?
A lawyer can help determine which contributions are relevant and how they should be presented as part of the overall circumstances.
3. Contributing Labour to a Property
Parents may sometimes assist with building, renovating, repairing, or maintaining a property.
For example, a parent with relevant trade or construction skills may undertake work that would otherwise have required paid contractors.
How do lawyers help in this?
Lawyers can help document the nature of the work performed and consider how it fits within the broader contribution history of the parties.
What Evidence Can Help Establish a Contribution?
Where a contribution is relevant to a property settlement, supporting evidence can help clarify what occurred and the circumstances surrounding it.
Depending on the situation, relevant evidence may include:
- Bank statements showing payments
- Loan agreements or other written arrangements
- Property purchase documents
- Emails or messages discussing the contribution
- Receipts for renovations or building materials
- Records of mortgage or property-related payments
- Evidence of childcare or other ongoing assistance
- Documents showing the source of funds
The type of evidence required will depend on the circumstances.
A lack of formal documentation does not necessarily mean that a contribution cannot be considered. However, establishing what occurred may become more difficult where there is little evidence about the arrangement.
Why Is It Important to Consider Contributions Carefully?
Understanding the contribution history can help provide a clearer picture of how the parties acquired, maintained, and improved their assets during the relationship.
This can be particularly important where parents have provided substantial financial assistance or ongoing practical support.
Keeping accurate records and obtaining appropriate legal advice can help clarify the nature of the contributions and how they may be relevant to the property settlement.
It is also important to distinguish between assumptions and evidence. A payment from a parent may appear to be a loan, for example, but the surrounding circumstances may provide further information about how the arrangement was intended to operate.
Final Thoughts
Parents can provide significant financial and practical assistance during a relationship. Contributions may include helping with a property deposit, making payments towards a mortgage, funding renovations, providing childcare, or contributing labour and other forms of support.
Whether these contributions affect a family law property settlement will depend on the circumstances and the nature of the contribution. Financial and non-financial contributions should be considered as part of the broader financial and personal circumstances of the parties rather than viewed in isolation.
For trusted legal guidance and tailored advice, visit the Tonkin Legal Group to learn how their experienced family law team can help you achieve a fair and practical property settlement. Call us on (03) 9435 9044 or reach us by email at reception@tonkinlaw.com.