If you give money to your kids, it won’t automatically come back to you if any of those things happen.
In order to protect against these types of events, the advance needs to be documented as a loan. In the absence of such a document, the “presumption of advancement” applies because of the relationship of parent and child and it will be considered a gift.
Ideally, in addition to a Loan Agreement, some form of security for the loan could be provided, such as a Mortgage or Caveat over land or a Security Interest registered on the Personal Property Securities Register.
Reproduced with permission of McKillop Legal (02) 9521 2455
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