‘Neither a borrower nor a lender be…’ – Hamlet Act 1, scene 3
Many parents give or lend a child money to help them buy a property. With property prices so high and children coming out of education with debt, getting on the property ladder means that a loan or gift is more common that it is not.
But what happens if the child enters into a relationship or marriage that later breaks down?
One person may say that money was a loan while another may say it was a gift. It can be difficult, time consuming and expensive for lawyers to try and unpick this once a marriage or relationship has broken down.
If you are lending money to or borrowing money from someone, enter into a formal written loan agreement or a Declaration of Trust which records that the person giving the money has an interest in the borrower’s property. There is a legal presumption against money being gifted, so if it is a gift this needs recording in writing by the donor. If the relationship does later break down it is much easier to establish that the money was a loan rather than a gift and vice verse.
Be sure to get advice from the experts here at HHB Law.