Family Law: When is a gift a gift?

Gifts as non-matrimonial property

Gifts are often relevant when considering the value of matrimonial property (the assets and liabilities in the “pot” to be divided when spouses separate) and determining what would be a fair division of the matrimonial property.

Gifts from third parties (family members etc.) are considered non-matrimonial assets. However, when a gift (for example, a monetary contribution towards a house) changes form (e.g. when the monetary gift becomes a house), the gift, in its original form, no longer exists and becomes entangled with something that is now considered matrimonial property. In such a situation, an argument can be made that account should be taken of this gift when considering how to fairly divide the matrimonial property. However, whether such an argument succeeds is at the discretion of the court.

Presumption against gifts

There is a general presumption that money given to another person should not be treated as a gift, but rather as a loan that will eventually become repayable.

For the purposes of family law, this is an important distinction because a loan that is repayable is a matrimonial asset to be taken into account when determining how to divide the matrimonial property.

A recent judgment in Glasgow Sheriff Court (https://www.scotcourts.gov.uk/media/yvtasnps/2025scgla019-jonathan-russell-and-irene-russell-against-rebecca-russell.pdf)  has highlighted the lesser-known principle of a “Special Presumption in Favour of Donation.” This special presumption applies when a payment or transfer is made by a person who has a natural obligation to support or provide for the recipient (such as a parent and child).

The cases referred to in the judgment are important because they clarify that the “natural obligation” is not limited to the parent-child relationship, where there are statutory obligations to provide support. The natural obligation extends more broadly to other family members, including siblings, aunts, uncles, nephews, nieces, and prospective in-laws. The judgment also clarifies that in a case where the gift is between a parent and child, the gift does not need to be given prior to the child becoming an adult to be presumed to be a gift.

In cases where spouses are separating, as noted above, the distinction between a loan and a gift is important – if the transfer can be shown to be a loan, for the purposes of valuing the matrimonial property, it will be listed as a debt against that spouse’s assets. If, however, the transfer is a gift and has been used to purchase another asset (most commonly money used to purchase a house), the recipient will need to try and persuade the court that they should be given credit for introducing the family gift.

Sheriff Reid’s recent judgment emphasises that where funds are transferred between family members, individuals cannot rely on the ordinary presumption against gifts. In the absence of anything to the contrary, transfers between family members will be presumed to be a donation.

If you are intending to provide a gift or a loan for a family member it is important that it be recorded as such at the time that it is made. Spouses should also consider whether it would be appropriate to enter into a post-nuptial agreement (or pre-nuptial agreement if it is before marriage) in order to outline how any gifts should be treated in the event of separation.

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The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.