15 January 2020

Moneys Advanced by Parents to Their Children: Gift or Loan?

In the decision of Hayes v Hayes [2015] QSC 88, the Supreme Court of Queensland determined that moneys contributed by the deceased towards the building of his daughter’s home were advanced by way of gift and were not a loan. As a result, the deceased had no beneficial interest in his daughter’s property and it did not form part of his estate for the purposes of a family provision application by his son.

In 1984, the deceased’s daughter purchased a vacant block of land in her own name. She then arranged for a home to be built on the land, to which the deceased and his wife contributed more than 50% of the build cost, in addition to significant contributions for ongoing renovations and upgrades to the property.

The deceased, his wife and their daughter moved into the property in 1985 and resided there together. As the deceased and his wife aged, their daughter assisted and took care of them until their deaths in 2013, including reducing her work days each week from five to four in order to do so.

The daughter told the Court that it was her parents wish and intention for the home to be hers and that they had contributed to the building of it in exchange for her allowing them to live there and caring for them in their old age.

The deceased and his wife made Wills in 1986 and 2008. On both occasions, they left their entire estate to each other and if they did not survive each other, to their daughter entirely. The 2008 Wills also stated:

I declare that all moneys given to my daughter during my lifetime were gifts. If any monies were given as loans, then forgive all loans and all interests owing thereon to me at the date of my death.”

The deceased’s son argued that the moneys contributed by the deceased and his wife to the building of the home were advanced by way of loan, not a gift, and that as a result, the deceased had a beneficial interest in the property and it formed part of his estate.

Ultimately, the Court determined that the moneys were advanced by the deceased and his wife on the basis that the house would be their daughter’s home, in the common expectation that she would care for them in their old age. Further, in the absence of her failing to carrying out that expectation (ie. not allowing them to reside in the property and looking after them in their old age), there had been no wrongdoing on her part and therefore, the parents had no beneficial interest in the property.

The Court stated further that even if (for argument sake) the moneys were advanced by way of loan, the special provision in the 2008 Will would forgive the loan, leading to the same result.

If there had been no forgiveness provision in the Will and the daughter had not fulfilled her bargain with the parents to care for them, the deceased’s son might have been able to bring a successful application on the basis of estoppel and/or a constructive trust. However, this was not possible on the fact of this case.

This decision demonstrates the importance of proper and thorough estate planning to ensure that your wishes and intentions are honoured when you die.

For more information or advice in relation to estate disputes or challenging a Will, please contact us today.

 

 


This article was posted by the Bennett & Philp marketing team on behalf of the Estate Litigation practice group. The article was authored by a former team member while they were under the employ of Bennett & Philp Lawyers. Final revisions were made by a Director in charge prior to publishing.

 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

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