wedding presents

Investing in your child’s future happiness

With all the talk of D-Day, Divorce Day and not to mention the blogs, articles and press releases flying around this month, at Paradigm Family Law we thought we’d look at things from a different angle.

Worried Parents

We see many more enquiries these days from the worried parents of expectant brides or grooms or indeed from concerned in laws who have just learned of the unfortunate breakdown of their offspring’s marriage. Why are they worried?

Ring-fence Wedding Gifts

They have invested money in their child’s relationship, and if it doesn’t work out they can sometimes feel that they should have some way of recalling funds or protecting them from their soon to be ex son or daughter in law or alternatively they want to ring-fence their investment in the event that the relationship falters.

Emotions can go down aswell as up

But have they done anything about it before the event? Often the answer is no. It is not something that was broached or that they felt could be discussed when emotions run high and everything is rosy. That is understandable, who wants to be seen as casting doubt over the strength of the relationship or questioning the motivation of their son or daughter in law’s keenness to tie the knot.

Due Diligence

However, if parents are looking to make an investment in their child’s relationship there are a number of precautions that they should take – call it due diligence.

Top 5 things to consider

1. Property – when helping fund the deposit or something larger to enable the couple to buy their first home together, consider a Trust Deed and specify the shares in which the home is to be held by the parties, as Tenants in Common. For more on the difference between tenants in common and joint tenants see our recent blog post here.

CAUTION: Don’t be tempted to ask your child to transfer ownership of the property back to you if you think the relationship has soured – it is no guarantee of safeguarding your investment. Any transactions or dispositions of land deemed to be made in an effort to frustrate matrimonial claims on divorce, can be set aside under S. 37 Matrimonial Causes Act 1973, and particularly any done within three years prior to a divorce – are often presumed to fall within these provisions. The court can vary and/or set aside any such transactions.

2. Is the money provided to the couple intended to be a Loan or a Gift? If a Loan, then the lender must draw up a Loan Agreement for the parties to sign in order to best protect their money. The terms can provide for repayment, when repayable and upon what basis. But note, if the money is a loan, then it remains due to the estate of the lender and as such may be liable to tax. Compare that to a Gift, where the money is not expected to be returned, and it is just that, a gift. It may still fall within the IHT tapered relief provisions but is not part of the donor’s estate.

3. Pre-Nuptial Agreements – these can be entered into by the couple themselves and specifically address the issue of pre-marital money and / or lifetime gifts from one or other family member.

4. Post-Nuptial Agreements – if the parties have already married, then it is not too late to protect an investment. The couple can draw up an agreement that deals with capital (or anything else for that matter) in the same way as when preparing a pre nup.

For more on Pre and Post Nuptial Agreements read our blog here.

5. Wills – Make provision in your will that sets out the basis upon which any funds have been advanced to your child. Whilst not binding upon a divorce court, it can be a factor considered in the overall consideration of the case under S.25 Matrimonial Causes Act 1973.

Strings Attached

If you are thinking of investing in your child’s relationship, and you want to discuss how best to protect your investment then speak to Paradigm Family Law first. It could be the best investment you ever make.

Contact Us

For more details on this or any other family law matter, please do not hesitate to contact James or Frank. Paradigm Family Law offers a free initial consultation and our fixed fee solutions cover financial proceedings from start to finish. You can call us on 0845 6020422 or email us to [email protected]. You can also follow us on twitter and LinkedIn and Facebook for the latest news and views on family law.