If you give money to your kids, it won’t automatically come back to you if any of those things happen.
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on their separation or divorce, it would be an asset of their relationship and be available for distribution between your son or daughter and their partner under the Family Law Act or the Property (Relationships) Act.
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on death, those funds will flow to their beneficiaries as stated in their Will (or if they don’t have a Will, in accordance with the laws of intestacy).
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on bankruptcy, their trustee in bankruptcy will be able to use those funds to pay themselves and any creditors.
In order to protect against these types of events, the advance needs to be documented as a loan. In the absence of such a document, the “presumption of advancement” applies because of the relationship of parent and child and it will be considered a gift.
Ideally, in addition to a Loan Agreement, some form of security for the loan could be provided, such as a Mortgage or Caveat over land or a Security Interest registered on the Personal Property Securities Register.
Source
Reproduced with permission of McKillop Legal (02) 9521 2455
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