Our suggestions are:
Without adequate legal advice and documentation, you might find yourself in a position where you are forced to intervene or are joined to someone else’s family law proceedings.
Common examples of third parties who might become embroiled in family law proceedings outside their own domestic relationships are:
The bottom line is that if you are financially intertwined with another person, seeking financial and estate planning advice is essential.
The Family Law Act 1975 (Cth) gives the Federal Circuit and Family Court of Australia the power to make Orders affecting third parties.
The Federal Circuit and Family Court of Australia have always had jurisdiction and power to make Orders against, and affecting, a third party. The involvement of third parties in financial litigation is becoming an increasingly common feature of such litigation, often much to the surprise of the third party themselves.
It’s the age-old story, parents helping their child to purchase a property. At the time, the parents may have labelled the funds as a gift, or an “informal” loan, or perhaps they were silent as to the nature of the funds.
At the time of separation of their child from that child’s spouse or partner, if there is not a secured Loan Agreement, then when a financial settlement is being negotiated there will almost certainly be a dispute as to whether money paid by a parent to a child is to be considered a gift or a loan.
In the event that there is no Loan Agreement in place, then those funds advanced may be treated as a gift, and therefore a contribution (but not one calculated dollar for dollar) on the part of the spouse who has received the gift from their parents. The funds will not be ordered to be repaid to you if classified as a gift.
Even in the event there is found to be a valid Loan Agreement, in New South Wales the Limitation Act 1969 (NSW) provides that there is a 6-year period from the date monies are paid to recover the debt, following which the claim is no longer legally enforceable.
What that means is that, for example, if you loan funds to your child in 2010, they separate from their spouse in 2016, and in 2017 (or later) you claim that the funds are repayable to you, the loan can be deemed unenforceable. Time starts to run from the date the money is given, and not on the date which repayment of the debt is requested.
Having had vast experience in advising and representing third parties in family law proceedings, Watts McCray encourage you to contact our office for specific legal advice in relation to the type of matters raised in this article, including the contents of a Loan Agreement.
Obtaining independent legal advice is the best way to ensure that you have adequately protected your investment, and are aware of any risks associated.
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