Protecting Assets From De Facto Claims: 2026 Guide

By The Chipkie Team, Personal Finance Editorial Team  ·  Last updated 7 September 2026

Protecting assets from de facto claims is a phrase most Americans have never heard — it’s the language used in Australia and New Zealand. But the risk it describes is very familiar here. It’s the parent who wires $80,000 to a daughter for a down payment, the daughter’s partner who moves in six months later, and the fight three years on over whether that money was a gift to the couple or a loan to the child. In the United States, that fight plays out through community property law, equitable distribution, common-law marriage statutes, and palimony claims — and the outcome usually turns on one thing: paperwork.

Key Takeaways

• The United States has no “de facto” regime, but unmarried partners can still make claims through common-law marriage (recognized in a minority of states), implied-contract or palimony suits, and constructive trust actions.
• Money given to an adult child is presumed a gift unless there is contemporaneous written evidence of a loan — and a gift, once commingled, can become divisible marital property.
• According to the IRS, the 2026 gift tax annual exclusion is $19,000 per recipient per giver, and the lifetime gift and estate tax exemption is $15,000,000 per individual following the One Big Beautiful Bill Act.
• Under the Fannie Mae Selling Guide (B3-4.3-15) and FHA rules, an unsecured family loan is not an acceptable source of down payment funds — it must be secured against an asset or the loan will be refused outright.
• A written cohabitation agreement, prenuptial agreement, or recorded promissory note is worth more than any verbal family understanding.

What does a “de facto claim” actually look like under U.S. law?

There is no federal de facto relationship status in the United States. Instead, an unmarried partner may assert rights through common-law marriage in the handful of states that still recognize it, through an implied or express contract claim (the Marvin v. Marvin line of cases), or by arguing a constructive trust over property they helped pay for or improve.

The practical exposure breaks down into three routes:

• Common-law marriage. Only a minority of states still allow a valid common-law marriage to be formed — Colorado, Iowa, Kansas, Montana, Oklahoma, Rhode Island, Texas and Utah among them, plus the District of Columbia. Several other states abolished it but still honor marriages formed before the cutoff date. Once established, it is a full marriage, and divorce rules apply. Check your own state’s current rule with a licensed attorney.
• Palimony and implied contract. California’s 1976 Marvin v. Marvin decision established that unmarried cohabitants can enforce express or implied agreements about property and support. Many states have followed some version of this.
• Marriage itself. The most common scenario by far. The partner marries your child, the family money has already been mixed into a joint account or a jointly titled home, and it is now on the table in a property settlement.

In the nine community property states — California, Arizona, Texas, Nevada, Washington, Idaho, Louisiana, New Mexico and Wisconsin — property acquired during marriage is presumptively owned 50/50. Gifts and inheritances to one spouse stay separate, but only if you can trace them. Deposit an inheritance into a joint checking account and you may have transmuted separate property into community property without meaning to.

Is a documented parental loan safer than a gift in a property settlement?

Yes, in most cases. A properly documented parental loan is a debt of the marital estate, reducing the divisible pot for both parties. An undocumented transfer is presumed to be a gift, and once commingled it can be split with a departing spouse or partner. The difference is created entirely at the moment the money moves, not afterward.

Our experience across the agreements our users create is that the single most damaging mistake is the retroactive note — parents papering a loan two years after the transfer, once a relationship starts to wobble. Judges see through it. So do opposing attorneys, who will subpoena the bank records and ask why no repayment was ever made or demanded.

Two further traps worth knowing:

1. Statutes of limitations. Written contracts are enforceable for roughly four to ten years depending on the state. A “loan” with no repayment schedule and no demand can quietly become unenforceable — and an unenforceable loan looks a lot like a gift.
2. Below-market interest. The IRS Applicable Federal Rate is the minimum rate a family loan should charge to avoid imputed interest. It is published monthly and changes constantly, so check the current month’s figure on the IRS website before drafting. Charging a genuine rate also makes the loan look commercial, which helps in family court.

If you want the deeper mechanics, our guide on divorce-proofing family loans under the OBBBA walks through the tracing rules step by step.

Can parents lend a down payment without breaking mortgage rules?

Only if the loan is secured. Under the consumer lending framework and specifically the Fannie Mae Selling Guide section B3-4.3-15, borrowed funds are an acceptable source of down payment only when secured against an asset. An informal, unsecured family loan is prohibited as a source of funds outright — this is not merely a debt-to-income problem.

This is the point most articles get dangerously wrong. They tell you a family loan “affects your DTI.” It does far more than that. If the underwriter discovers that down payment money came from an unsecured personal or family loan, the file is declined — not repriced, not adjusted, declined. FHA rules operate the same way; see HUD’s guidance on acceptable sources.

To do it properly:

• Execute a promissory note with a repayment schedule and a rate at or above the current AFR.
• Secure the note against real property — typically a second deed of trust or mortgage recorded behind the primary lender.
• Disclose it to the lender before underwriting, not after. The payment will be counted in DTI, and that is the correct outcome.
• Have the child’s partner or spouse sign an acknowledgment that the funds are borrowed, not gifted.

On gift letters: a gift letter is a signed declaration to a federally regulated lender that the money is a gift with no expectation of repayment. If your family in fact expects to be repaid, that letter is false and signing it is mortgage fraud — a federal offense. This happens constantly, and almost never maliciously; families sign because a loan officer said it was “easier.” Choose one path honestly: a real gift, or a real secured loan. Never a secret loan dressed as a gift. Our breakdown of the Bank of Mum and Dad contract covers how to structure this cleanly.

What documents actually protect family money from a partner’s claim?

Four documents do the heavy lifting: a written promissory note, a recorded security instrument, a cohabitation or prenuptial agreement, and a clean paper trail showing separate funds were never commingled. Verbal understandings, text messages and family loyalty protect nothing once lawyers are involved.

Practical checklist:

1. Paper the money before it moves. Note, date, amount, rate, repayment schedule, signatures from both the child and — ideally — the partner.
2. Record a lien. A deed of trust or mortgage recorded against title puts the world on notice and survives a divorce filing.
3. Use a cohabitation or marital agreement. Most states have adopted some version of the Uniform Premarital and Marital Agreements Act. What Australians call a binding financial agreement, Americans call a prenup, postnup or cohabitation agreement — same function, different statute, and it must meet your state’s requirements for disclosure and independent counsel.
4. Take title deliberately. Tenants in common with unequal shares, rather than joint tenancy, preserves each party’s actual contribution and avoids forced survivorship. Include a no-spouse-claim clause if you are in a community property state.
5. Keep separate money separate. A dedicated account for gifted or inherited funds is the cheapest asset protection available.
6. File Form 709 where required. A gift above the $19,000 annual exclusion to one recipient triggers a return. Filing does not mean tax is due — it draws down the $15,000,000 lifetime exemption. A filed 709 is also strong evidence of who the gift was intended for.

What else do people ask about protecting assets from de facto claims?

Does living together for seven years create a common-law marriage?

No. The seven-year rule is a myth. Common-law marriage exists in only a minority of states and requires present intent to be married, cohabitation, and holding yourselves out publicly as spouses. Duration alone creates nothing. Confirm your state’s rule with a family law attorney before assuming you are safe.

Will a promissory note signed after a breakup still work?

Rarely. Courts weigh contemporaneous evidence heavily. A note created once a relationship deteriorates invites a finding that it is a sham designed to shield assets, which can damage credibility on every other issue. Document at the time of transfer, keep bank records, and make or demand repayments consistently from day one.

Can my child’s partner claim part of a house I helped buy?

Possibly, if they contributed to payments or improvements, were added to title, or can show an implied agreement. A recorded lien for your loan, a tenants-in-common deed reflecting true contributions, and a written cohabitation agreement dramatically reduce this exposure. Our guide on proving a verbal loan exists in court explains the evidentiary hurdles.

Is charging interest to my own child really necessary?

It strengthens both positions. Charging at least the Applicable Federal Rate avoids IRS imputed interest treatment and makes the arrangement look genuinely commercial to a family court judge. Check the current month’s AFR before you draft, since it changes monthly and yesterday’s figure may already be stale.

Where should you start?

Protecting assets from de facto claims in the United States is not about clever structures. It is about being honest and specific at the moment money changes hands: is this a gift or a loan, to one person or to a couple, secured or unsecured, disclosed to the lender or not. Families who answer those four questions in writing almost never end up in court. Families who avoid the awkward conversation frequently do.

If you are about to lend money to a child, a sibling or a friend, create a legally structured family loan agreement in minutes with Chipkie — dated, signed, and built to hold up when a relationship or a marriage does not.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial or legal advice. Laws and lending criteria vary significantly between states. We always recommend consulting with a qualified real estate attorney and financial advisor before entering into a property purchase or financial arrangement with another party.