Difficult marriage/asset questions
Discussion
Couldn't think of a snappier title sorry!
So i'm in a bit of a difficult position with some potential inheritance and having recently got married. To set the background, my OH and I bought our first house around 8 years ago, and my parents stumped up the whole deposit. At the time, we did a declaration of trust to show that this deposit amount stayed in my name after the house was sold, with any remaining to be split 50/50.
We've recently got married so I believe that declaration isn't active as the marriage would supersede it so for all possesions we're "all in" so to speak. That's cool.
My dad passed away last year, and now my mum is now in a care home and has stopped chemo so we're only headed in one direction
My mum wants to give both myself and my sister a large amount of money before she leaves us (from the sale of the family house earlier in the year), however due to the sums involved she wants to ensure that some/all of the amount is proteced should I get divorced (or equally should my sister get divorced from her partner). Now obviously this is all a bit awkward, but this is a life changing amount (6 figures) but is there actually a way of protecting her money even with the marriages in place? Even trying to take the emotional aspect out of it, I can only see 3 options:
- Tell mum that i'm married for a reason and that any gift goes to both of us (risk would be that she gives the money elsewhere)
- Find a legal method to protect her money, and deal with any awkwardness between the mrs and I.
- Money is the root of all evil, and tell her to donate all of it to charity.
If it makes any difference, mum and my wife get on very well, and my wife is awesome and would be understanding of my mums wishes, but even so I can't help thinking it might make things awkward later on.
edited to add: I will go see a solicitor in a couple of weeks, but want to go in with my eyes relatively open as most of my research so far seems to indicate that once the money is transferred, that it ends up in the pot that would get split "fairly" should i get divorced later on, and that the "fairly" isn't ever clear cut.
So i'm in a bit of a difficult position with some potential inheritance and having recently got married. To set the background, my OH and I bought our first house around 8 years ago, and my parents stumped up the whole deposit. At the time, we did a declaration of trust to show that this deposit amount stayed in my name after the house was sold, with any remaining to be split 50/50.
We've recently got married so I believe that declaration isn't active as the marriage would supersede it so for all possesions we're "all in" so to speak. That's cool.
My dad passed away last year, and now my mum is now in a care home and has stopped chemo so we're only headed in one direction
My mum wants to give both myself and my sister a large amount of money before she leaves us (from the sale of the family house earlier in the year), however due to the sums involved she wants to ensure that some/all of the amount is proteced should I get divorced (or equally should my sister get divorced from her partner). Now obviously this is all a bit awkward, but this is a life changing amount (6 figures) but is there actually a way of protecting her money even with the marriages in place? Even trying to take the emotional aspect out of it, I can only see 3 options:- Tell mum that i'm married for a reason and that any gift goes to both of us (risk would be that she gives the money elsewhere)
- Find a legal method to protect her money, and deal with any awkwardness between the mrs and I.
- Money is the root of all evil, and tell her to donate all of it to charity.
If it makes any difference, mum and my wife get on very well, and my wife is awesome and would be understanding of my mums wishes, but even so I can't help thinking it might make things awkward later on.
edited to add: I will go see a solicitor in a couple of weeks, but want to go in with my eyes relatively open as most of my research so far seems to indicate that once the money is transferred, that it ends up in the pot that would get split "fairly" should i get divorced later on, and that the "fairly" isn't ever clear cut.
Edited by MrChips on Tuesday 30th December 12:22
Depends on how you plan on spending it surely?
If you buy another house to let out then that 'asset' could be in your name and thus (possibly) protected, but the income from the rent would probably be spent on your joint interests.
If you spend it on upgrading your existing house then you might be able to lay claim to a larger chunk of the equity should you have to sell it upon divorce.
Things like holidays, cars etc would be a different matter.
I think that the only way to do this would be getting your wife to sign some sort of agreement. Your solicitor would advise, but I think in your shoes I would trust my own marriage and treat it as a joint inheritance. But then I don't subscribe to the whole SWTs view.
If you buy another house to let out then that 'asset' could be in your name and thus (possibly) protected, but the income from the rent would probably be spent on your joint interests.
If you spend it on upgrading your existing house then you might be able to lay claim to a larger chunk of the equity should you have to sell it upon divorce.
Things like holidays, cars etc would be a different matter.
I think that the only way to do this would be getting your wife to sign some sort of agreement. Your solicitor would advise, but I think in your shoes I would trust my own marriage and treat it as a joint inheritance. But then I don't subscribe to the whole SWTs view.
Awkward position to fin yourself in. Be careful as it sounds like the act of wanting to protect this potential money from future problems could cause a rift where there currently isn't one.
I like your first approach: you are married for a reason. Use this financial bonus to benefit you all equally as a family. Don't go nuts, spend on the needs more than the wants and hopefully everything will be fine. Why go in assuming it won't be (says the eternal optimist).
I like your first approach: you are married for a reason. Use this financial bonus to benefit you all equally as a family. Don't go nuts, spend on the needs more than the wants and hopefully everything will be fine. Why go in assuming it won't be (says the eternal optimist).
A trust is the obvious answer (perhaps a grandchildren's trust ... if you plan on having any kids). Question is what do you intend to use the money for? i.e. how much access do you need to it?
Something worth thinking about now is IHT, if your mum is looking to give you and your sister 6 figure amounts, its a fair possibility that her estate might come in above the nil rate band (even after adding on your late father's allowance, assuming it hasn't already been used). These gifts would most likely be counted as potentially exempt transfers and thus be added back into her estate if she were not to survive the 7 year period following a PET. I would urge you to seek proper financial advice with regard to these potential gifts and your mother's estate (and its value) to make sure you aren't setting yourself up for a potentially hefty tax bill on the eventual passing of your mother.
It may not be a problem, but it would pay you to establish a sound estimate of the potential value of your mother's estate before going any further as that may well dictate the best direction for these gifts.
Something worth thinking about now is IHT, if your mum is looking to give you and your sister 6 figure amounts, its a fair possibility that her estate might come in above the nil rate band (even after adding on your late father's allowance, assuming it hasn't already been used). These gifts would most likely be counted as potentially exempt transfers and thus be added back into her estate if she were not to survive the 7 year period following a PET. I would urge you to seek proper financial advice with regard to these potential gifts and your mother's estate (and its value) to make sure you aren't setting yourself up for a potentially hefty tax bill on the eventual passing of your mother.
It may not be a problem, but it would pay you to establish a sound estimate of the potential value of your mother's estate before going any further as that may well dictate the best direction for these gifts.
I agree it could cause issues and sounds like your Mum does not see your spouse as 'family'.
I would tell Mum that it will be put somewhere safe like a savings account to put her mind at ease and leave it there.
When the dust settles, so to speak, I would then let my wife know that 'mum left us some money' and use it within the marriage for whatever purpose.
Your Mum feels good whilst with you, your wife feels good about your mum, you feel good.
Sorry, not the SP&L answer you may be looking for, but sod letting money get in the way of relationships. If you feel your marriage is proper, it will make no odds for richer or for poorer. If there is not 100% trust you may as well tell your wife you have an exit fund for when you part ways at some point. Or just tell your Mum thanks but no thanks.
I would tell Mum that it will be put somewhere safe like a savings account to put her mind at ease and leave it there.
When the dust settles, so to speak, I would then let my wife know that 'mum left us some money' and use it within the marriage for whatever purpose.
Your Mum feels good whilst with you, your wife feels good about your mum, you feel good.
Sorry, not the SP&L answer you may be looking for, but sod letting money get in the way of relationships. If you feel your marriage is proper, it will make no odds for richer or for poorer. If there is not 100% trust you may as well tell your wife you have an exit fund for when you part ways at some point. Or just tell your Mum thanks but no thanks.
Post-nuptial Agreement?
I know they're not 'strictly binding' but will be pretty watertight if you do end up getting divorced especially if signed individually, witnessed by solicitors from different firms.
You can also state that certain 'life occurrences' will render the Agreement void. E.g. The birth of your first child.
I know they're not 'strictly binding' but will be pretty watertight if you do end up getting divorced especially if signed individually, witnessed by solicitors from different firms.
You can also state that certain 'life occurrences' will render the Agreement void. E.g. The birth of your first child.
Devil2575 said:
Option 1.
Married but planning for divorce doesn't make sense IMHO.
that works both ways, if he holds the cash outside of the marriage to respect his mother's wishes in the short - medium term and his wife has an issue with this, then surely it is an issue that is equal to him wishing to sign some long term agreement?!Married but planning for divorce doesn't make sense IMHO.
I could understand if it was an asset that his wife had sacrificed before but it is a 'gift', certainly nothing to fall out over.
I can think of two conflicting options.
Could it be put in trust for several years with some kind of clause that it is solely for you at that time (avoiding it as being classed as a marital asset)?
Or
Just get on with living life and enjoy it when the time comes - nobody knows what's around the corner and you can't take it with you either...
I'm inclined to run with the latter (ianal) but have been divorced twice...
Could it be put in trust for several years with some kind of clause that it is solely for you at that time (avoiding it as being classed as a marital asset)?
Or
Just get on with living life and enjoy it when the time comes - nobody knows what's around the corner and you can't take it with you either...
I'm inclined to run with the latter (ianal) but have been divorced twice...
Devil2575 said:
Option 1.
Married but planning for divorce doesn't make sense IMHO.
It makes a lot of sense to those who have been there, sad but true.Married but planning for divorce doesn't make sense IMHO.
Many people believe that they have the most perfect, loving and solid relationship imaginable, until their partner meets someone else.
All of a sudden, all bets are off, and you become the devil incarnate - at least, in their eyes.
To say that it's bewildering is a colossal understatement.
dave123456 said:
Devil2575 said:
Option 1.
Married but planning for divorce doesn't make sense IMHO.
that works both ways, if he holds the cash outside of the marriage to respect his mother's wishes in the short - medium term and his wife has an issue with this, then surely it is an issue that is equal to him wishing to sign some long term agreement?!Married but planning for divorce doesn't make sense IMHO.
I could understand if it was an asset that his wife had sacrificed before but it is a 'gift', certainly nothing to fall out over.
Not sure where in the country you are, but if you're in Scotland, the position is that inheritance is only yours as long as it stays exactly as it was when you got it. For example, if you receive a lump sum in cash and stick that in a separate bank account, that's yours and yours only.
The problems arise if you do something with the cash e.g. you use it to improve the marital home, you buy shares or (seeing as it's PH) you buy a car!
The other issue is that this is the position for inheritance - I can't be sure that this would apply to cash payments whilst your mother is still alive.
As I said, not sure where you are and, if you're in E&W then not sure what the position is. As usual, this isn't legal advice etc...
The problems arise if you do something with the cash e.g. you use it to improve the marital home, you buy shares or (seeing as it's PH) you buy a car!
The other issue is that this is the position for inheritance - I can't be sure that this would apply to cash payments whilst your mother is still alive.
As I said, not sure where you are and, if you're in E&W then not sure what the position is. As usual, this isn't legal advice etc...
The OP also needs to look at the rules on gifts, the amounts being gifted and the need to survive 7 years to avoid inheritance tax which unfortunately sounds like the impending situation. I'm not sure giving away assets to avoid say care home costs washes with anyone either nowadays.
I imagine a trust of some form is the only way around these things. She needs to spend some of that money on good professional advice and a will.
I imagine a trust of some form is the only way around these things. She needs to spend some of that money on good professional advice and a will.
Devil2575 said:
dave123456 said:
Devil2575 said:
Option 1.
Married but planning for divorce doesn't make sense IMHO.
that works both ways, if he holds the cash outside of the marriage to respect his mother's wishes in the short - medium term and his wife has an issue with this, then surely it is an issue that is equal to him wishing to sign some long term agreement?!Married but planning for divorce doesn't make sense IMHO.
I could understand if it was an asset that his wife had sacrificed before but it is a 'gift', certainly nothing to fall out over.
dave123456 said:
Devil2575 said:
dave123456 said:
Devil2575 said:
Option 1.
Married but planning for divorce doesn't make sense IMHO.
that works both ways, if he holds the cash outside of the marriage to respect his mother's wishes in the short - medium term and his wife has an issue with this, then surely it is an issue that is equal to him wishing to sign some long term agreement?!Married but planning for divorce doesn't make sense IMHO.
I could understand if it was an asset that his wife had sacrificed before but it is a 'gift', certainly nothing to fall out over.
What kind of message does it send to his wife if measures are put in place should they divorce?
You go into marriage with your eyes open being prepared to share your life and your worldly possessions. If this is a problem then you shouldn't be getting married.
Devil2575 said:
dave123456 said:
Devil2575 said:
dave123456 said:
Devil2575 said:
Option 1.
Married but planning for divorce doesn't make sense IMHO.
that works both ways, if he holds the cash outside of the marriage to respect his mother's wishes in the short - medium term and his wife has an issue with this, then surely it is an issue that is equal to him wishing to sign some long term agreement?!Married but planning for divorce doesn't make sense IMHO.
I could understand if it was an asset that his wife had sacrificed before but it is a 'gift', certainly nothing to fall out over.
What kind of message does it send to his wife if measures are put in place should they divorce?
You go into marriage with your eyes open being prepared to share your life and your worldly possessions. If this is a problem then you shouldn't be getting married.
if the reason is outside of the marriage then it seems a sensible solution.
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