Parents taking legal action to recover money loaned to children
More and more parents are taking legal action to recover money they lent to their children to buy a home, according to research by the Times newspaper.
It says there are now up to 15 cases a month compared with only 3 cases a month five years ago. Many of the disputes involve parents trying to get their money back after their child’s marriage ends in divorce.
In one case, a couple tried to prevent their estranged daughter-in-law getting a half share of the £2m they provided to buy a house. They argued that the money they put forward while the couple were still together was an investment, not a gift.
They lost their case, however, which meant they not only lost their money but had to pay their daughter-in-law’s costs as well.
An increasing number of young adults now rely on their parents to help them buy a home or to fund other large transactions, yet very few families draw up legal agreements outlining crucial issues such as whether money provided by the parents is a gift, a loan, an investment or some other arrangement.
This is despite the fact that such agreements are easy to draw up with the help of a solicitor and can help protect what, for many people, could amount to their life savings.