How you can help protect money you’ve loaned or gifted to your child, perhaps to buy property, if their relationship breaks down

  • As parents and possibly grandparents too, you will inevitably be affected by your child’s relationship breakdown.
  • If you have gifted or loaned them money, perhaps to buy their first home, you will want to know what happens to that money if the relationship has ended.
  • We can set up agreements before you pass over your money, so it’s protected if there are future problems, or provide practical advice if your child’s relationship is already over.

The focus on a relationship breakdown tends to be around the separating or divorcing couple, yet it also has an impact on the wider family. You will want to know:

  • How you can help and support your separating or divorcing child.
  • How you can support your children.
  • What happens to money you’ve gifted or loaned to the couple before or during the relationship, now that it’s broken down? Can you get the money back, for example and how would you go about this?

With so many parents having to loan or gift money to their adult children to help them buy their first home, what happens to that money after a relationship breakdown is an increasing concern. If you are contemplating this sort of investment, it’s a good idea to talk to us first. We can help you decide if the money is a loan or a gift, and if it is a loan how it is going to be protected.

Setting out a formal legal agreement between all the parties can help prevent complications later on. There are routes available that ensure you can help your child get on the property ladder, while still protecting your wealth as an individual:

  • You can buy the property together with your child and their partner, so you are legally registered on the title
  • You can use a Declaration of Trust, where the property is owned by your child and their partner so they have that security, but your interest in it is registered so you will receive your share if the property is subsequently sold.

By safeguarding the money you’ve put towards the property, we can make sure it can be available again if the relationship ends and you want to use the money to help your child (and their children) set up home again.

We recommend you talk to us when you are thinking about giving money to your child or have already loaned or gifted it. As highly experienced family and divorce lawyers, this is an area we are often asked to deal with. Together with our colleagues who specialise in protecting private assets and wealth, we are well placed to advise you and create formal agreements that ensure everyone knows where they stand.

We have offices in Southampton, Lymington, Guildford, Woking, Richmond and London and offer specialist family law support and advice to clients nationwide.

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