Leading law firm Maurice Blackburn is also reminding parents to consider how any financial assistance they provide could affect their future estate planning.
“It’s a common rite of passage in many families that parents loan their children money for any number of purchases, with research showing ‘the bank of mum and dad’ is one of the nation's largest lenders when it comes to buying a home in particular,” said Andrew Simpson, a principal at Maurice Blackburn.
“Given the current pandemic-related economic crisis, we expect more Australians will turn to their parents for financial assistance, including for living expenses like bills and rent.
“That is all entirely understandable, but in my work I have seen too many occasions where such situations can end up coming between family members.
“I urge everyone who is giving or receiving money from family to document the terms of the arrangement to try and avoid any problems down the track.
“Something as simple as an email outlining whether the money is a gift or a loan can help avoid family disagreements and reduce the likelihood of legal disputes arising.”
Mr Simpson, who heads the Wills and Estates practice at Maurice Blackburn, said his top five tips when giving money to family were:
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