It is very common for people to receive financial assistance from parents and family members throughout their lives. Upon divorce, this can often lead to the question: will I be expected to re-pay this money, or will it be treated as a gift?

Distinction between a loan and a gift

In financial remedy proceedings, this question is particularly important because how this money is treated impacts the amount of money in the marital pot.

If this payment is treated as a gift, it can be considered as a contribution given to you and that does not have to be repaid. This money can instead be included in the matrimonial pot and used to meet the parties' needs.

If this payment is treated as a loan, it cannot be considered part of the matrimonial pot and instead will be noted as a liability that must be repaid, much like a loan from a bank.

Is it a loan or a gift?

Payments given to parties by family members may be considered as a gift if there is not a clear obligation for repayment. If you are receiving or giving money in this context and would like this to be repaid, it is important to ensure that a written agreement is made. However, even then it cannot be guaranteed that this type of payment will be considered a loan rather than a gift and the ultimate decision lies with the court.