It is a familiar arrangement. Parents overseas fund a Melbourne apartment and put it in the name of the child studying here. Or a relative in Australia holds shares or property “for” the family. In Chinese this is often called 代持, holding on someone’s behalf. Years later, the parent dies, the child marries, or the relative refuses to hand the property back. Who owns it?
The legal starting points
- The register is not the whole story. Australian courts look at who paid and what the parties intended.
- Resulting trust. If one person pays for property put in another’s name, the law generally presumes the registered owner holds it on trust for the person who paid.
- Presumption of advancement. If the payer is a parent and the owner is their child, the presumption usually runs the other way: it is presumed to be a gift. That presumption can be displaced by evidence that a gift was not intended.
- Evidence. Who paid the deposit and the mortgage, who received the rent, who paid the rates, what was said in messages at the time, and how the property was treated in tax returns.
Where it gets dangerous
- The child’s divorce. In a family law property settlement, an apartment in the child’s name may be treated as the child’s asset unless a trust can be proved.
- The child’s death or insolvency. The property may pass under the child’s will or to their creditors.
- Arrangements made to avoid rules. If property was put in someone’s name to avoid foreign purchaser duty, foreign investment approval or tax, enforcing the arrangement can be difficult. There may also be penalties. Advice is essential before taking any step.
What to do
- If the arrangement already exists, document it now, for example with a declaration of trust, and get advice on the duty and tax consequences of doing so.
- If you are making a will, make sure your executor knows what is held for whom and where the evidence is.
- If you are an executor or beneficiary dealing with such an asset, act quickly. Lodging a caveat over the title may protect the estate’s claim while it is resolved.
Frequently asked questions
Who owns a property registered in a child’s name but paid for by the parents?
Not necessarily the child alone. Australian courts look at who paid and what the parties intended. Where a parent pays for property in a child’s name, the law usually presumes a gift, but that presumption can be displaced by evidence that a gift was not intended, in which case the child may hold the property on trust for the parent.
What is a resulting trust?
A resulting trust can arise where one person pays for property that is put in another person’s name. The law generally presumes that the registered owner holds the property on trust for the person who paid, unless the evidence shows otherwise or, between a parent and child, the presumption of advancement applies.
What evidence shows a property was held on someone else’s behalf?
Courts look at who paid the deposit and the mortgage, who received the rent, who paid the rates, what was said in messages at the time, and how the property was treated in tax returns. A written declaration of trust, made while everyone involved is still alive, is the clearest evidence.
What should an executor do about property held for the deceased in someone else’s name?
Act quickly. Gather the evidence of who paid and what was intended, and get advice. Lodging a caveat over the title may protect the estate’s claim while the matter is resolved. Where the arrangement was made to avoid duty, foreign investment rules or tax, advice is essential before taking any step.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice. Victorian law unless stated otherwise.
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