Paying your child’s legal fees

B2B Editor8 May 2017

Paying your child’s legal fees

Having to represent yourself in family law litigation is a very difficult thing to do. Many couples are simply not in a position to resolve their disputes via the mediation process or by agreement, and find themselves involved in litigation about the division of their assets and also the parenting arrangements for their children. They often find it difficult to raise the necessary funds to either commence or continue this litigation. This sees them turning to others for assistance.

There has been an increase in the number of parents and in some cases grandparents, who are utilising their retirement savings and the equity in their homes to assist adult children to fund legal proceedings after a separation.

The person who is funding the litigation may not fully understand what is happening throughout the Court process nor have a short, medium or long-term estimate of fees for their child’s case. This can understandably create a great amount of stress.

As your child’s lawyer cannot speak to you without their authority, it is wise to obtain an authority to speak to their lawyer so that you can have an understanding of the process and fees. It is also beneficial to ask the lawyer for regular estimates of the likely costs of the case. In some circumstances, it may be appropriate for you and your child to both sign a fee agreement with the law firm.

It is very important that you keep detailed records of the amount of money you have provided to your child for their legal fees. You should also consider whether or not you intend this to be a gift to your child or whether it is a loan they need to repay. If it is a loan, it is vital to document when the money is to be paid back and under what terms. When money is being advanced for the payment of legal fees, it is extremely important for the Court to understand and have regard to a loan that is repayable and that there is documentation to establish that the debt is repayable.

If for some reason you do not require your child to repay the money immediately or in the near future, you may see this as part of your estate planning issues. This is especially important if the expectation is that the child who had their legal fees paid will receive less from your estate than their siblings because of the assistance you gave to them. In these circumstances, it is crucially important that this is documented as well. Your lawyer will be able to advise how best to do this so that after your death, there is no disagreement between your children about whether the money was a loan or a gift during your lifetime and the expectation on how this would be treated after your death. This may involve revisiting your Will.

Alison Osmand is a Senior Associate of the firm
18 Kendall Lane, New Acton, Canberra
phone 02 6212 7600
[email protected]