What have I done – did I loan you my money or was it a gift to you?

Loan when Family Member in Need - Big Law

What have I done – did I loan you my money or was it a gift to you?

Most of us have experienced this – an urgent call from a family member asking for a loan or help to pay certain bills.

Many of us do not hesitate to help a family member in need by agreeing to help them. So, are you sure that the money you have given will be repaid? Is it really a loan or a gift?

Money given to a family member is sometimes given on an urgent basis or overtime but without either party seeking any legal advice or knowing their rights. The critical issue to determine is whether the money given to a family member is in fact a loan or a gift.

In a recent District Court of Queensland case of Bergham v. Bergham, the Court dismissed the parents’ claim that monies they had lent to their son should be paid back to them. Although the Judge found that the son had abused the parents’ generosity, the parents could not prove that they had a legally enforceable loan agreement with their son.

His Honour also held that a promise to pay the money back is a moral obligation rather than one which creates a binding loan agreement.

Things to consider when making loans to family members include, but are not limited to (1) whether or not the recipient of the money treats it as a loan or a gift from you; (2) when does the loan need to be repaid; (3) is interest payable on the loan and at what rate; (4) how will the loan be repaid, i.e. what if the family member then helps you when you move or helps you during your time of need without any direct financial assistance; should you seek independent legal advice; (5) should you seek financial advice as to the impact you may face having regard to say your pension.

It is also critical to note that loans made to family members or others that do not specify a term for the loan or are ‘at call loans’ are subject to the statute of limitations as to when a claim can be brought for pursuing payment.

Therefore, if you are requested to provide someone with financial assistance and you intend that assistance to be by way of a loan and expect that the loan will be repaid, then we strongly recommend that you seek your independent legal advice before advancing any money. Contact Mahendra Mohan on 1800 431 604.

If you have any queries regarding the above, please do not hesitate to contact us at Big Law Solicitors on 1800 431 604 or email us at [email protected].

How We Can Help

Big Law Lawyers Strathpine offers you the same comprehensive suite of legal services that you would expect to only find in the city.

We are a successful well-established legal practice based in Strathpine, Brisbane. We have earned a reputation for providing trustworthy, practical legal advice to a diverse range of clients, in both Brisbane and regional Queensland.

Things to Read

Estate Planning for Blended Families

In this podcast, Estate Planning Lawyer Elise Jaques discusses factors and challenges that can arise in estate planning for blended families. Elise Jaques Solicitor Make an appointment

Buying a commercial property

Whilst the process of purchasing a commercial property is very similar in many respects to buying a residential property, there are a whole other set of matters to consider with this asset type.  The first issue to consider is what are your intentions or motivations for purchasing the property? Are you planning to run yourRead More »Buying a commercial property

Buying a manufactured home in an over 50s village

You may have reached the point in your life where you are sick of maintaining a large home and garden and would like to downsize. There are many options to consider, some of which are: Buying a small house or townhouse with a small yard; Buying in a retirement village which usually involves taking aRead More »Buying a manufactured home in an over 50s village

What is a reverse mortgage?

What do you do if you are over 60 without a regular source of income other than the pension as you have retired and find that you have to fund urgent renovations to your home? Or unexpected medical expenses? Or you would like to refinance high-interest credit card debt or other liabilities? As you areRead More »What is a reverse mortgage?

Podcasts to Listen to

Estate Planning for Blended Families

In this podcast, Estate Planning Lawyer Elise Jaques discusses factors and challenges that can arise in estate planning for blended families. Elise Jaques Solicitor Make an appointment

What Happens After You Sign an REIQ Contract?

In this podcast, Legal Practitioner Director Sylvia Lopez shares all the steps that follow after you sign a contract when buying or selling a property. Sylvia Lopez Legal Practitioner Director Make an appointment

What You Need to Know About Commercial Leases

In this podcast, Legal Practitioner Director Sylvia Lopez discusses the complex nature of commercial leases and agreements.  

Some very important estate planning roles you need to understand

When it comes to estate planning, it’s not uncommon for people to confuse a few very important roles. In this podcast, Estate Planning Solicitor Elise Jaques clears the differences among estate planning roles.