Gift or loan? The legal grey area of the ‘bank of mum and dad’
A growing reliance on familial financial support is presenting unprecedented legal risks for Australian families, leaving both parents and adult children vulnerable to costly disputes and fractured relationships.
New research led by the University of Newcastle has found a hidden issue behind the trend – many families cannot clearly distinguish whether financial support is a gift or a loan.
Drawing on interviews from parents and first-home buyers across New South Wales, the research team found that most familial financial arrangements are informal, undocumented and based on trust.
Despite an expected ease in the market, housing affordability continues to dominate headlines and dinner conversations. The findings raise further concerns about financial elder abuse, with older Australians carrying the greatest risk if informal agreements break down. Many parents provide financial help without seeking legal advice.
The research comes as intergenerational assistance – often dubbed the ‘bank of mum and dad’ – is increasingly seen as essential for entering the property market, especially in high-cost cities.
The authors, including Dr Mirella Atherton and Dr Julia Cook, are calling for:
- Better public awareness of legal risks
- Greater use of formal agreements and legal advice
- Reform of outdated legal presumptions that no longer reflect modern family practices
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