Gifts like a house protected in case of a divorce?

judywoody

Ok, this is a bit tricky - We just got married and don't have any intention of getting divorced (gladly) - However, we have the opportunity of getting a house either for free or to pay off interest free or to rent for a low rate. My father (who is German and lives in Germany) would consider buying us a house (cash available). But he was a bit reluctant when he heard that in the UK there are no such things as legally binding prenuptial agreements - which you can do in Germany. So the law is 50/50. He obviously wants me to keep the house in case of a divorce (his first marriage didn't work out, therefor he is very keen on prenuptial agreements especially because he is quite loaded). There are 3 options: either he could make a gift (in this case the house)in my name to avoid inheritance tax. Or he could buy it and we rent it of him or he could buy it and we pay it off interest-free over the next 20 years. Because it is very likely that I end up inheriting the house anyway, option 1 would make more sense. However, I need to reassure him first that in case of a divorce I won't lose the house. Which of these options is the best in case of a divorce? I belive that gifts and inheritance are not included when it comes to splitting up the assets?Can anyone help me with this?

rrf494g

beware thinking "normal practice" is law

On any (unfortunate) divorce, English law (I assume you're in England) would apply, and whilst there may be "normal" provisions for settlement of assets (regarding gifts etc), English law never says never. Each case can be argued (well or badly) in any way, to produce, more or less, any result. German law is based on Nepolionic principles, so there are rules which are applied. English law (in order to provide lawyers with lots of work I fear) is based on every case being argued like a boxing match. English law often produces surprise results because of this.(maybe it is fairer - it certainly is more expensive)

If your father doesn't want to trust your marriage (his choice), I think he should not put assets into your ownership. Others may have different views.

regards

judywoody

Well he would really like to make gifts in order to avoid inheritance tax - and the problem is that he has no trust in ANY marriage not even in his own. I will inherit anyway and if we get divorced afterwards it will end up being the same.

Pee

I have no idea what the IHT implications are for someone who is German and living in Germany. Your father needs to speak to a German qualified solicitor and find out more about this.

A prenuptual agreement might have been an idea, although now too late as you are in fact married.

One option a German lawyer may not suggest is to put the property in Trust. This would be an option and you and any future children and maybe a charity or other relatives could be the potential beneficiaries. Indeed your husband could be a potential beneficiary. It is likely to be expensive as you would need English and German legal advice but nowhere near as expensive as getting divorced and losing half.

Any assets owned by a couple at the time of their divorce will be taken into account. A Trust which they are Discretionary beneficiaries of would be unlikely to.

judywoody

I read the following re prenuptial agreements:

Are they legal in the UK?
In the United Kingdom, pre-nuptial agreements currently have no legal standing. The divorce courts have the last word in the division of all matrimonial property and would ignore any pre-nuptial agreement if they thought that it was in any way unreasonable to either of the parties involved, particularly regarding to the maintenance and housing of children. For example, regardless of whose name a couple’s property is in, a court may order it to be transferred to the other. This applies to all property that is owned seperately or jointly







And with regards to what I said earlier I found this:


Asset Protection Divorce
Many families want to make sure that errant spouses have no claims on family assets and they do not wish to rely on the divorce and seperation laws to achieve this. Divorce is always unpleasant and regrettably sometimes it is impossible to avoid but the sense of injustice that can arise from a court ordering a reallocation of assets can be devastating.

Marital property involves all income and assets acquired by either spouse during the marriage, even if an asset is in one spouse's name. At the time of divorce, this marital property is subject of contention between the separating couple. However, there are certain types of non-marital property which may not be divided at the time of divorce. These properties include property owned before marriage, your inheritance, and gifts.

rrf494g

I agree with "pee" above, about trusts-

but don't miss the word "unlikely" - any trust arrangement can be challenged in a number of ways. My earlier post was intended to warn a German (and I went to university in Germany) that the german assumptions about laws do not apply in English law. There are very few "rules" as a german would naturally understand it, so English legal advice, even when sound and well given, will always have qualifications which would sound strange to a german ear. It often sounds vague and non-commital to an English ear too, but that's another story.
regards

tyllwyd

Rather than getting everything muddled up with house ownership, which is all a bit of a minefield, if your father is in a position to give you money, why not come up with another solution for example, he gives you a gift of a substantial amount of money which you keep invested in your name only, but you use the interest to help pay the mortgage. Or he gives you the deposit only, rather than the entire cost of the house, and you own the property as tenants in common with the shares reflecting the fact that you contributed different amounts (maybe 75:25 instead of 50:50). Your husband would benefit from some extent from the fact that your dad had given you money, but not to an unreasonable extent considering that the two of you are married.



Oh, and why not have a look through this thread
https://forums.moneysavingexpert.com/discussion/2376873

princeofpounds

If he is determined to follow this course of action and protect assets from any divorce then you might want to look into trust structures where you do not own the asset but it is held in trust for you to benefit from.

theturtle

Hi there

I would go to the citizens advise bureau (CAB) they have offices all around the country they are free and they will give you advice or put you in contact with someone that can help, best is to call or just walk in and book an appointment.


This is the link:
citizensadvice.org.uk/


good luck
theturtle

LydiaJ

judywoody wrote: »

Asset Protection Divorce
Many families want to make sure that errant spouses have no claims on family assets and they do not wish to rely on the divorce and seperation laws to achieve this. Divorce is always unpleasant and regrettably sometimes it is impossible to avoid but the sense of injustice that can arise from a court ordering a reallocation of assets can be devastating.

Marital property involves all income and assets acquired by either spouse during the marriage, even if an asset is in one spouse's name. At the time of divorce, this marital property is subject of contention between the separating couple. However, there are certain types of non-marital property which may not be divided at the time of divorce. These properties include property owned before marriage, your inheritance, and gifts.

I'm not sure where you found that - are you sure it was about English law? Anyway, the word "may" in that sentence indicates that anything can happen. Certainly my divorce solicitor never said anything about inheritance or gifts being omitted from my divorce settlement, and it would have made a big difference. Also, it's only anecdotal, but a friend told me that another of our friends lost her inheritance to her ex as part of her settlement.

My grandfather set up a trust to benefit his children and grandchildren, and so stopped my uncle's ex-wife getting hold of any of the family money. So I agree with others who have suggested this that it is probably the best way to go.

If I were your father, and held the views he holds, then I would consult an English divorce solicitor for advice (assuming he speaks good English as so many Germans do). I personally wouldn't bother with CAB - you might come across an advisor that's an expert in this sort of thing, but it might be too esoteric for most of them. (Or maybe it's just the one advisor whom I saw who was clueless about anything other than the most basic details of divorce law!)

princeofpounds

CAB are unlikely to be interested in helping much. They are there to give advice to people with serious problems, not general legal advice. They will probably just point you to a lawyer anyway.