Sometimes parents will advance large amounts of money to their adult children. It may be more common as children rely on parental support for help to buy houses.
If a relationship ends, there may be problems if it is unclear whether the parent intended that money to be a gift or a loan. The distinction may make a big difference on the amount of relationship property the partners share, even if the advance was made to just one of the partners. That is because a loan might be classified as a relationship debt, whereas a gift might be classified as relationship property.
The law presumes that an advance from parents is a gift to their child. That means that a person who claims that the advance was a loan must prove it.
There have been cases where a person has argued that the law should not assume a parental advance is a gift because in the family’s ethnic culture it is usual for parents to loan money to their children.
Because it may be more common for parents to advance money to children, and because New Zealand is becoming more culturally diverse, we want to know whether the current rules need to change.