The Bank of Mum and Dad: help your child — but get it in writing
Helping a child into property is one of the most common things New Zealand parents do — and one of the easiest to get wrong. In June 2026, the Court of Appeal decided Liao v Liao, where parents who put money toward their daughter’s Auckland investment property went all the way to two courts to get it back — and lost. The reason is the part most families never think about: when a parent gives a child money, the law can start by assuming it was a gift. Here is what the case decided, and the one step that would have avoided the whole dispute.
Key points
• Helping a child buy property is normal — but undocumented help is where expensive family disputes begin.
• In Liao v Liao (June 2026), parents who contributed to their daughter’s purchase lost: the court found the money was a gift.
• For a parent-to-child contribution, the law presumes a gift — the “presumption of advancement” — unless the evidence shows otherwise.
• Texts and later conduct are now admissible to prove intention, but they cut both ways and are no substitute for a document.
• A clear written agreement, plus independent legal advice for each side, is what prevents a Liao-style fight.
What happened in Liao v Liao
In 2012 Pei-Ya Liao bought a residential investment property in Glen Innes, Auckland, in her own name. Her parents contributed about 10% of the price — $52,050 — and she funded the rest from her savings and a bank loan. Years later, her parents asked her to transfer the property to them, saying it had always been meant to be theirs. She refused. They sued, arguing she held the property on trust for them. (You can read the full decision here: Liao v Liao [2026] NZCA 250.)
The High Court found the contribution was a gift, and the Court of Appeal agreed. The parents’ appeal was dismissed in June 2026. They did not get the property, and they were ordered to pay their daughter’s costs.
Two legal concepts decided the case. The first is the resulting trust: when you pay for property that ends up in someone else’s name, equity normally presumes you meant to keep the beneficial interest, so the other person holds it on trust for you. The second is the presumption of advancement: in certain close relationships the law instead presumes a gift. The Court of Appeal confirmed that this gift presumption still applies in New Zealand between parents and their children — including adult children — because the parent-child relationship is considered uniquely likely to reflect an intention to benefit the child.
The law can start by assuming it’s a gift
This is the part that surprises people. Many parents assume that because they paid, the money is obviously theirs to get back. For a parent-to-child contribution, the law’s starting point can be the opposite: a gift. That is the presumption of advancement at work, and it rests on a simple idea — parents are presumed, in the absence of evidence to the contrary, to intend to benefit their children.
It is only a presumption, and evidence can displace it. In Liao, the Court of Appeal did not need to rely on that presumption: looking at everything the parties had done, it found sufficient evidence that the parents intended a gift, so the daughter kept the property. But the lesson for a parent who intends to take out a loan, or who wants to keep an ownership stake, is stark: if you do nothing, the starting assumption may work against you.
The one thing the Liao family got wrong: nothing was written down
Nothing recorded what the $52,050 actually was. That single omission is what turned a family arrangement into years of litigation between parents and their daughter.
The courts were left to reconstruct intention from what the Court of Appeal called a “paucity of contemporaneous evidence” — and from angry text messages sent nearly a decade later, in 2021, after the relationship had broken down. The court confirmed those later messages and conduct were admissible to show what the parties had intended, but it also warned that such evidence carries an “obvious risk of self-serving statements.” Messages written in the heat of a family rift are a poor and unpredictable substitute for a document signed at the time.
There is a further, human detail. The parents did not speak English and, on the evidence, relied on their daughter to handle the legal side of the purchase. No independent lawyer recorded what they thought they were agreeing to. Had each side simply written down — and taken their own advice on — whether the $52,050 was a gift, a loan, or a share, there would have been nothing to argue about.
Five ways to help your child — each needs its own document
There is more than one safe way to help, and the right one depends on what you want to achieve. Each option only works if it is properly documented.
1. A loan agreement. Lend the deposit and record it as a loan, with the amount, any interest, and the repayment terms in writing. If your child’s relationship later breaks down, the document shows the money was a loan, not a gift, and is repayable.
2. Buy a share of the property. You, or your trust, take a recorded ownership interest, which provides security and a share of any growth. Be aware that as a co-owner, you will have to sign the bank mortgage and loan agreement, so you will be liable to the bank if your child cannot pay. In addition, if your share is sold within two years, the gain will be taxable as income under the bright-line test if the property is not your family home.
3. A trust for your child. Holding the property in trust can preserve some protection and control. But a child whose home is owned by a trust needs to check with their KiwiSaver provider to see whether they can use a KiwiSaver first-home withdrawal. If your child is in a relationship, relationship property questions can still arise when your child repays the mortgage from their income.
4. A gift with strings attached. If you are happy to gift the deposit but want to protect it, you can make the gift conditional on your child and their partner signing a contracting-out (relationship property) agreement.
5. A family mortgage. Lend the money yourself, secured by a registered mortgage over the property and repayable with interest. This formalises the loan and gives you security if things go wrong.
The common thread is documentation. A gift, a loan, and a co-ownership share have very different consequences — and in a dispute, the paperwork, or its absence, decides the outcome.
Independent legal advice — for you and for your child
Liao v Liao is, above all, a case about advice that was never taken. When money moves between generations, each side should have its own lawyer — not share one, and not rely on the family member who happens to be organising the purchase. Independent advice means the contribution is correctly characterised at the outset, the right document is prepared, and everyone understands what they are signing. It is far cheaper than a Court of Appeal hearing.
RHL prepares loan agreements, co-ownership and family-mortgage documents, contracting-out (relationship property) agreements, trusts and wills, and we can act for your child on the purchase itself. We can also advise parents and children separately, so each side has genuinely independent advice.
Where to get information and support
• Liao v Liao [2026] NZCA 250 — the full decision
• Inland Revenue — the bright-line property rule
• Property (Relationships) Act 1976 — contracting-out agreements
• RHL — property law and conveyancing · RHL — estate planning
One change to watch
The gift presumption itself is under quiet pressure. Several New Zealand judges have questioned whether the presumption of advancement should still apply to independent adult children, and Canada’s highest court has already held that it does not. For now the Court of Appeal has confirmed it remains part of New Zealand law — but it may be revisited. Either way, the safe course does not change: put the arrangement in writing, and the presumption never has to be argued about.
Helping a child into a home, or worried about money you have already put in? RHL can document the contribution correctly, prepare the right agreement, and advise you independently — before a misunderstanding becomes a court case. Get in touch.
This article is general information only and is not legal, tax or financial advice. It describes the law as at June 2026, which may change. Outcomes depend on the specific facts. Your situation is unique; please obtain specific legal advice before acting.
