Are Gifts Included in Divorce Settlements in Australia?

Your parents helped you buy the house. Fifty thousand towards the deposit, maybe more, handed over at the kitchen table with nothing in writing because you are family. Now the relationship is over, and you are lying awake wondering where that money goes.

The short answer is yes, gifts can be counted in the property pool when you separate. What happens next turns on two things: who the gift was really for, and what was documented at the time. Get those two right and a gift can still work in your favour. Get them wrong and the money your parents worked for can end up split with your ex.

Let me break down how it works.

What is a gift in divorce?

A gift is money or property handed over with no expectation of repayment. In a separation, gifts between spouses (jewellery, a car, money) generally sit in the property pool with everything else. Gifts from outside the relationship, usually from parents, are where the real questions start. The court is not asking who owns the gift. It is asking how the gift should be treated when the whole pool is divided.

Are gifts from parents marital property?

When you separate, the court works through the property framework in the Family Law Act: identify the pool, assess each person’s contributions, weigh up future needs, and check the result is fair overall. Gifts are assessed at the contributions step.

The framework sits in s 79 of the Family Law Act 1975 for married couples and s 90SM for de facto couples, in the codified form that has applied since 10 June 2025. The court’s property overview sets out the same steps.

Here is the rule most people have not heard: a gift from your parents is normally treated as a contribution made by you, not by both of you. If your mum and dad put $80,000 into the deposit, that usually counts on your side of the ledger and can shift the split in your favour. The exception is a gift clearly made to both of you, a wedding gift addressed to the couple, for example. That one belongs to the relationship.

So the gift is not lost. But it is not quarantined either. It goes into the pool, and it is weighed. If you want the mechanics of how contributions turn into percentages, my team has covered it on our property settlement lawyers page.

This is where a lot of people get caught out, though. Because the first fight is rarely about who the gift was for. It is about whether it was a gift at all.

Gift or loan? How courts decide

Money from parents is presumed to benefit their own child unless the evidence shows something else. That presumption comes from a Family Court decision that lawyers still rely on today.

The authority is Kessey & Kessey [1994] FamCA 162; (1994) FLC 92-495.

Why does gift versus loan matter so much? A genuine loan is a debt. It comes off the top of the pool before anything is divided, so the full amount goes back to your parents. A gift stays in the pool and is merely weighed as your contribution. On a $100,000 advance, the difference between those two outcomes can be most of the money.

When a court decides whether family money was a loan or a gift, it looks for three things:

1. A written loan agreement from the time the money changed hands, not one drawn up after the separation
2. Repayments actually made, even small ones
3. Whether repayment was ever demanded before the relationship broke down

No paperwork, no repayments, no demands? The court will almost always call it a gift.

The $75,000 lesson

Let me tell you about a matter that shows exactly how this plays out.

A father had lent $75,000 to his daughter so she could purchase a house. The house was worth three hundred thousand dollars, and she purchased it. Years down the track, he then claimed and said that he owned one quarter of that house that his daughter had purchased, and that he was actually investing in the purchase of that house.

Nothing was in writing. No loan agreement, no repayment schedule, not even an email setting out the deal. So when it ended up before the court, the outcome was blunt.

The court ended up ruling that he didn’t actually own anything in that house, and that the funds that he advanced to his daughter were in fact a gift. So protect yourself: document it, put it in writing. What is the purpose of these funds for? Are you loaning these funds? Are you expecting these funds to be repaid to you at some point?

So here’s the legal lesson: an undocumented family advance is a gift by default. If your parents mean it as a loan, it has to look like a loan from day one.

What happens to pets?

Pets used to sit in an awkward legal gap: loved like family, treated like furniture. That has changed. Since 10 June 2025, the Family Law Act deals with companion animals directly.

See s 79(6) and (7) of the Family Law Act 1975 for married couples and s 90SM(6) for de facto couples.

The court can now give the pet to one of you, transfer it to someone else who agrees to take it, or order its sale. And in deciding, it weighs who actually cared for and paid for the animal, any family violence or cruelty towards it, and the attachment each person (and any child) has to it. Not whose name is on the receipt from the pet shop. The dog your ex gifted you for your birthday does not automatically stay with you, and it does not automatically go back either.

What to do with the wedding ring after divorce?

An engagement or wedding ring is treated like any other gift: it is an asset of the pool. In practice, most people simply keep their own rings and the settlement adjusts elsewhere. What you do with yours after that is personal. Some keep it, some remodel the stones into something new, some sell it and draw a line.

How to protect gifts from divorce

If your family is helping you, or you are the parent doing the helping, here is the checklist worth saving:

1. Document the purpose at the time. One page, signed and dated, saying what the money is for and whether it is to be repaid.
2. Use a written loan agreement for advances. Include repayment terms, then actually make repayments, even nominal ones.
3. Consider a binding financial agreement for significant gifts. It is the cleanest way to quarantine family money before or during a relationship.
4. Formalise the split with consent orders at settlement. They make the treatment of the gift final and enforceable.

A word of caution on a tactic I hear a lot: putting assets in your parents’ names to keep them out of a settlement. It does not quietly work, and it drags your family into the middle of your court case.

You’re going to complicate these proceedings. You’re actually going to involve your parents in the court proceedings. They’re going to be parties to these proceedings, they’re going to be dragged into it, they’re going to have to get lawyers, they’re going to pay legal fees, and everything is going to get a lot worse for everyone. So do I advise you to put assets in name of your parents? No.

If a gift, a family loan, or a helped deposit is sitting inside your separation, get advice before positions harden. My team and I do this every week. Book a free discovery call on 1300 614 732 and we will walk you through where the money stands and what to do next. No pressure, no judgment, just honest advice.