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Protect a family loan from third parties

We document the money as a secured loan, so a separation or a creditor cannot take it.

You are helping one of your children into a house or a business, and you are not worried about them. You are worried about everyone else: the partner who may not still be there in five years, the creditor who turns up if the business does not work, the sibling who queries it when the estate is divided. Handed over informally, the money is simply theirs, and it is exposed to all three. Documented and secured, it is a debt owed back to you, which means you have standing to protect it when something goes wrong and can forgive it when nothing does.

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Not part of a property settlement

A properly documented and secured loan is a liability to be accounted for, rather than money in the pool to be divided.

Ahead of unsecured creditors

A registered security interest ranks ahead of ordinary creditors if your child's business or finances come under pressure.

Reversible when the risk passes

You can release or forgive the loan at any time, so the protection costs your child nothing if nothing goes wrong.

How does a secured family loan protect the money?

A documented loan makes the advance a debt rather than the recipient’s own money. Security registers that debt against something: a mortgage over the property it helped buy, or a registration on the Personal Property Securities Register over other assets. In a property settlement the loan is a liability to be accounted for rather than a windfall to be split, and against a creditor a registered interest ranks ahead of unsecured claims. It also stops the transfer being re-argued as a gift or an advance when the estate is divided.

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What is the difference between a family loan and a gift?

A gift transfers ownership outright, with nothing owing and no protection once the money lands. A loan creates a debt that can be secured against your child’s assets. That gives you standing to recover the funds if they face a creditor claim or a relationship breakdown.

Can I take security over my child's assets?

Yes. Where the loan is funding real property, a mortgage is the usual answer. For other assets a registration on the Personal Property Securities Register records your interest and ranks it ahead of unsecured creditors. Which fits depends on what the money is buying.

Will a court respect the loan in a family law dispute?

It carries much more weight when the documentation is contemporaneous, the terms are realistic and the security was actually registered. An agreement drawn up after the relationship soured, or one nobody ever treated as a real debt, attracts far more scrutiny.

Can I forgive the loan later?

Yes, at any time, and many families do once the child is established or the risk has passed. You can also deal with it in your will. Either forgive the debt, or account for it against that child’s share so the siblings are treated as you intend.

Helping a child into a home or a business?

We document family support as a secured loan and register the security, so the money is protected from a separation or a creditor and can be released once the risk has passed.

You trust your child. That is not the risk

You want to help with a deposit or some capital, and you want the money to reach your child rather than their former partner or a stranger holding a judgment. An undocumented transfer gives you no standing at all once it lands. The protection has to be built before the money moves, because a record cannot be created after the problem appears.

We will advise on structuring the support as a secured loan rather than a gift.
We will prepare a loan agreement with terms that will stand up if tested.
We will take and register the right security, by mortgage or on the PPSR.
We will align the loan with your will so the debt is dealt with deliberately.
We will advise on releasing or forgiving the loan when the risk has passed.

Is this your situation?

Your children are adults trying to get established while the cost of doing so keeps climbing, and you can help. You also know a family where the parents helped informally, the marriage ended two years later, and half of it left in the settlement. Or one where a business failed and a creditor reached money that had nothing to do with the business. You want to be generous without being naive, and you do not want the arrangement to feel like your child is being managed or mistrusted. You want something that sits in a drawer and only matters if it has to.

What's included in your family loan service

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Advice on loan structure and the security that suits the asset.
Loan agreement preparation.
Mortgage or PPSR registration.
Integration with your will and estate plan.
Advice on later variation, release or forgiveness.

What an undocumented advance costs

Money given informally is legally the recipient’s, and that single fact drives everything that follows. In a property settlement it goes into the pool to be divided, and a share can leave with a former partner. A creditor with a judgment pursues it on the same basis, because there is nothing on the record saying it is owed to anyone.

The quieter failure comes later. With no loan document, nobody can say whether the transfer was a gift or an advance against an inheritance, and siblings take different views in good faith. That argument runs at exactly the point when the person who could settle it is no longer there. In every one of these cases the missing element is the same, and it is not the money: it is a record made at the time.

How we set the loan up

Rather than transferring the funds outright, we document the advance as a loan and secure it. We prepare the agreement, set the terms so they are realistic rather than decorative (a loan nobody ever intends to enforce is easier to challenge), and take the security that fits: a mortgage where it is funding real property, a PPSR registration where it is not.

We register the interest, make sure the arrangement is executed properly, and align it with your will so the debt is dealt with deliberately on your death rather than by accident. If something goes wrong in your child’s life you have standing to act. If nothing does, you can release the loan at any time, including by forgiving it in your will. Either way the money stayed where you meant it to.

Three steps to protected support

From the decision to help to a debt that is registered and enforceable.

Identify the risk

We establish who you are helping, what they are buying, and which of separation, creditors or estate disputes you most need to guard against.

Pick the security

We settle the loan terms and whether a mortgage or a PPSR registration is the right protection for the asset involved.

Document and register

We prepare and execute the loan, register the security, and align the arrangement with your will.

Lawyers who build the protection before the money moves

The awkwardness is real: nobody wants to hand a child a loan agreement and imply you expect their relationship to fail. In practice the document does the opposite of what it feels like, because it is the thing that lets you be generous with a larger sum than you would otherwise risk.

We structure these arrangements so they are protective without being intrusive. We prepare the loan, take the security that actually fits the asset, and register it properly, then it sits quietly in the background. Two of our lawyers are full members of the Society of Trust and Estate Practitioners, and we deal with the estate side at the same time, so the loan and your will say the same thing about what happens to the debt when you die.

Our great lawyer guarantee

Six principles we hold to, whatever you bring us and however long it takes.

Take the time

We listen carefully to understand what you want to achieve, then step you through the advice and the documents.

Share our knowledge

We pass on as much as we can, so you can make your own informed decisions.

Stick to our knitting

We only do what we are good at, so you never pay for our learning.

Work as one team

Someone is always available to answer your question or point you the right way.

Fair pricing

A fixed or capped quote for advice and documents, so you do not carry the price risk.

It is your show

We are in it for a front row seat to witness your success, not for our egos.

About to transfer a deposit?

Tell us who you are helping, what they are buying and how much. We will tell you how to structure it so the money is still there if their circumstances change.

Speak to a lawyer 1300 654 590