Protect your parents by entering into a pre-nup
With soaring house prices it is often the norm for parents to loan or help their children contemplating marriage with a deposit when buying their first joint home. But what happens when the spouse also benefits from that gift?
If a marriage breaks down, the starting point for financial settlement is an equal division of the assets. There are factors which would give reason to divert from and equal division. But what happens to the deposit? Well, if it is not protected it will inevitably be included in the assets for division.
One way to protect the investment for you and your parents is to enter into a pre-nuptial agreement at least 21 days prior to the marriage. I know, not the fairy tale beginning to marital life but it is becoming increasingly common as a means of setting out the various contributions to the marriage and the consequences of a relationship breakdown on those assets. If a pre-nuptial agreement is in place the Court will consider its content. Although not yet binding upon the courts they are ‘persuasive’ the more so if they are correctly drawn up and completed. You have insured your car over the years for much more than it would cost to draft a pre-nuptial agreement to protect your assets and your parents’ gift which they may have considered a ‘conditional loan’ i.e. you can have the money while you remain together but if you and your partner break up we want the money back or you solely to benefit from it.
Pre-nuptial agreements require careful drafting and often an informal discussion with your solicitor can help ease the conversation. The agreements can take some time to agree so it is best to consider your options early than the month before the wedding.
There are alternatives to protecting the ‘gift’ such as a charge or mortgage but pre-nups are coming more into use and the courts are giving more weight to their content. It is inevitable that in the near future they will be included in legislation and become binding upon the parties.
If you have any queries in relation to this post, please contact, Tim Mellors on 01423 851 126.