8 Jun 2026
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Many first-time buyers rely on financial help from parents or other family members to get onto the property ladder.
Whether it's a contribution towards a deposit, a lump sum to reduce mortgage borrowing, or money loaned to help buy a family home, support from the so-called "Bank of Mum and Dad" has become increasingly common.
But what happens if the relationship later breaks down and the couple divorce?
Can parents get their money back? Is the contribution treated as a loan or a gift? And how will the family court view the money when deciding a financial settlement?
Yes, this is usually the most important question.
When a divorcing couple receives financial support from parents, the court will want to understand exactly what was intended when the money was provided.
Generally speaking, the money will fall into one of two categories: a gift, or a loan.
The way the money is treated can have a significant impact on the financial settlement.
If parents gave money to help their child and their spouse buy a home, and there was no expectation that the money would be repaid, it is likely to be treated as a gift.
In many cases, gifted money becomes part of the family's overall assets and may be considered when dividing finances on divorce.
This can come as a surprise to parents who assumed the money would always remain connected to their child.
Although a court may recognise that the money originally came from one side of the family, its primary concern will be achieving a fair outcome for both spouses and any children involved.
Usually, no. Once money has genuinely been gifted, it can be difficult to argue that it should be returned following a divorce.
This is particularly true if:
Without clear evidence that the money was intended to be repaid, the court may regard it as part of the matrimonial assets available for distribution.
A genuine loan may be treated differently.
If parents intended the money to be repaid and there is evidence supporting that arrangement, the loan may be recognised as a liability that should be considered during the financial settlement.
Evidence might include:
The stronger the evidence, the easier it is to demonstrate that the money was never intended to be a gift.
A Declaration of Trust is a legal document that records how money contributed towards a property should be treated.
For example, parents who provide £50,000 towards a house purchase may wish to record that:
Having a properly drafted Declaration of Trust can provide valuable protection and significantly reduce uncertainty if relationships break down in the future.
Not all loans are treated equally.
Family courts will often look at whether the loan is a genuine debt that is likely to be enforced. Factors that may suggest a loan is genuine include:
Where money was handed over informally with no documentation and no expectation of repayment, the court may conclude that it was effectively a gift.
The presence of children can significantly influence the outcome. The court's priority is ensuring that children's housing and welfare needs are met.
As a result, even where a parent argues that money should be returned, the court may decide that the available assets are needed to provide suitable accommodation for the children.
Every case is fact-specific, but children's needs will often be a major consideration when determining a fair financial settlement.
Yes. Anyone planning to help a child purchase a property should consider obtaining legal advice before transferring funds.
Possible options include:
Putting arrangements in writing at the outset is usually far easier than trying to establish intentions years later during divorce proceedings.
If money from parents was used to buy the family home, it is important to seek specialist family law advice as early as possible.
The outcome will depend on:
Every situation is different and obtaining advice early can help you understand your position and protect your interests.
Questions involving family loans, gifted deposits, and property ownership can quickly become complex during divorce proceedings.
At Hegarty, our experienced family law team can advise on financial settlements, property disputes, declarations of trust and the treatment of family contributions following separation or divorce.
Contact our Family Law team today for clear, practical advice tailored to your circumstances.
Whatever legal support you need, our experienced and highly skilled solicitors and legal advisors are here to help. With expertise across a wide range of legal areas, we provide clear, practical advice tailored to you. What sets us apart is our commitment to understanding your needs and delivering the best possible outcome with a personal touch.
