Land given by parents: Is it a gift or part of the property settlement?

Written by Justine WoodsCooper Grace Ward

 

Mr and Mrs Mabb were married for around 12 years. During their marriage, Mr Mabb's parents transferred 60 acres of land to them jointly.

After they separated, Mr Mabb argued that the transfer of property was a contribution made on his behalf, for which he ought to receive all the credit for and accordingly, a greater portion of the property pool.

 

What did the Court decide?

The trial judge disagreed with Mr Mabb and held that the transfer of acreage by his parents was a contribution made jointly with Mrs Mabb.

Mr Mabb was so dissatisfied by the trial judge's decision that he appealed to the Full Court of the Family Court. Unfortunately for Mr Mabb, the Full Court agreed with the trial judge.

So why didn't Mr Mabb get all the credit for the acreage from his parents?

 

What is the usual treatment of gifts?

The normal rule, if such a thing can be said to exist in family law, is that a significant gift of money or land to a couple during their relationship is taken to be a contribution by the related spouse only. The cases have trained family lawyers to ask 'would the gift had been made if not for the family relationship between the giver and the related spouse?'. If the answer is no, the contribution is generally found to be made by one party only.

 

Why did this case differ?

However in this case, the Court found that Mr Mabb's parents intended to benefit the parties jointly and not Mr Mabb solely because:

  • at the time of the transfer, Mr Mabb's parents said they were transferring the land on the basis that Mr and Mrs Mabb would support them if needed

  • true to that intention, Mr Mabb's parents built a house on the gifted land and lived there

  • Mrs Mabb enjoyed a good relationship with Mr Mabbs's parents and continued to support them, even after the parties had separated.

 

The evidence of both Mr and Mrs Mabb was that the gift of land by Mr Mabb's parents to them jointly was in exchange for an obligation assumed by both of them to provide future support to Mr Mabb's parents.

This is a case that turns on its facts. If there were no continuing obligation to support Mr Mabb's parents, the fact that the property was transferred into the joint names of the parties may not have been enough to establish that the gift was intended to benefit them jointly, although it would certainly have been arguable.

In many cases, gifts are only made as a means of benefiting a child to the marriage, with the spouse of that child only benefiting by virtue of being in a relationship at the time the gift was made.

 

Evidence of the donor's intention

This case highlights that, where there are gift-giving relatives, it is important to present the court with evidence of the actual intention of the donor at the time the property was gifted.

The type of things that will be important are:

  • who the donor said was to benefit from the gift at the time of the transfer

  • what the donor documented at the time of the transfer (i.e. is there a written record of the donor that says the gift was intended for both spouses?)

  • whether the property was transferred into the joint names of the spouses or the sole name of the recipient

  • whether the property was transferred in exchange for something done or a future obligation of both spouses or only the recipient.

 

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Justine Woods
Cooper Grace Ward

Justine Woods is a partner at Cooper Grace Ward and leads the family law team. She has been an accredited family law specialist for nearly two decades.

Cooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice.

You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice.

If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.

This article has been republished by Divorce Resource with the kind permission of the author.

 

Cooper Grace Ward LawyersCooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice.

You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice.

If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.

 

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