Wednesday, 23 May 2012

‘Greyday loans’ on the Rise

A large number of grandparents are financially supporting their adult grandchildren according to a recent survey by MoneySypermarket.com. According to the results of the survey almost a quarter of grandparents and nearly one third of parents are still being relied upon by adult grandchildren and children to help ease the pressure of rising living costs, high unemployment, spiralling educational costs and debt.

Although families have always supported one another financially it appears that the current economic downturn and increased financial pressures mean that the younger generation is increasingly relying on that support to meet not only the day-to-day costs of living but also to help fund bigger-ticket items such as cars and first homes. Whilst that support can be incredibly helpful, or in some cases absolutely necessary, how should so called ‘greyday loans’ from parents and grandparents be treated on divorce?


When the court looks at a potential financial settlement the starting point is to consider all the assets. This will include any items purchased using loans from family members. If however the parties ‘needs’ can be met without resorting to those assets it may be possible to exclude them from the division. This is though a potentially complex area of law and you should seek legal advice from an expert family lawyer.

Loans to assist with day-to-day expenses can be treated as a debt to be repaid in the same way that a bank loan or credit card liability would have to be taken into account. There is however no guarantee of this and much will depend on individual circumstances, including whether or not there was a formal loan agreement. In the absence of such evidence your ex-spouse may argue that the money is a ‘soft loan’ which does not need to be repaid in the same way as say a bank loan, or may even argue that the money is in fact an outright gift and will never be repaid. Again, divorce advice from a family lawyer should be sought.

For more advice on divorce follow our family law blog or follow us on Twitter @divorce_experts.



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