Properly Documenting Gifts It is very important to properly document any substantial gifts made. This needs to be done to avoid disputes over whether the gift was actually a gift or if it was a loan. These sorts of disputes come up in 3 main areas: Bankruptcy Family Law Death Example 1 John gives his son $100,000 as deposit for the purchase of the son’s main residence. John later becomes bankrupt. The trustee in bankruptcy will argue that the transaction was not a gift but a loan and that it should be repaid and taken by creditors. Example 2 John gives his son $100,000 and dies a year later. John’s new wife/daughter/aunty/beneficiary under the will disputes that the transfer was a gift. If it wasn’t a gift it would fall back into the estate and will be passed on to the beneficiaries under the will (or intestacy laws) Example 3 John gives his son $100,000 and the son later divorces. The son then argues it wasn’t a gift, but a loan from John and therefore should not be part of any settlement with his wife. Whichever way you go properly documenting it can save you from messy and costly disputes later. The best way to document a gift is with a deed which is witnessed by a third party. A deed can clearly show the intentions of the parties – both recipient and the giver. It can be a good idea to scan and email to yourself so that you have further evidence of when the deed was entered into – people have been known to backdate things. If there is a dispute showing the deed may ‘nip it in the bud’. Some of these disputes end up in the Supreme Court with costs going over $100,000.