Lynn Brenner Lynn Brenner

Brenner answers questions about all aspects of family finance.

My son wants us to give him a down payment to buy his first home. I worry that he and his wife don't have the best relationship. Is there any way I could give them the money, but tactfully request it back if they break up?


There's only one way to do that. Make them a loan instead of a gift.

Ask your son and daughter-in-law to both sign an "on-demand" promissory note, says Eric Kramer, a Uniondale estate lawyer.

"On-demand" means you can ask them to repay it anytime you want. The potential wrinkle is that if their down payment is a loan, your son and daughter-in-law might find it harder to get a mortgage. Banks sometimes ask borrowers who didn't earn their down payment to sign a statement saying it's a gift, not a loan. (In case you're wondering, says Kramer, your son and daughter-in-law couldn't legally transform a loan into a gift by signing such a statement.)

Alternatively, you could make the gift to your son alone, says Sharon Kovacs Gruer, a Great Neck estate lawyer. Under New York's marital law, if the gift is his "separate property," your daughter-in-law can't claim it in the event of a divorce. To keep it as separate property, he must put it in a bank account in his sole name until he uses it as a down payment. If he commingles it with other money -- putting it into the same account as his paychecks, for example -- your gift becomes a marital asset that's subject to division in a divorce. But if it's his separate property, your son is legally entitled to keep it, even if he gets a divorce.

The bottom line A "separate property" down payment belongs to one spouse, even if both spouses own the house jointly.

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