Will Gifts to Your Children Be Dispersed if They Divorce?

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Parents often face an uphill struggle in ensuring that gifts made to their children are not dispersed in divorce proceedings. In one case, a wife was granted a substantial stake in a trust fund which was set up by her husband’s wealthy parents.

The parents owned a £325,000 farmhouse which they had placed in a trust of which their son was the main beneficiary. He lived there with his wife until the breakdown of their relationship. In subsequent divorce proceedings, a family judge found that the trust was a post-nuptial settlement which had been created with the objective of providing a home for the couple.

The judge directed that the wife should be paid £23,000 from the trust and that a further £134,000 should be set aside for her lifetime benefit. She was permitted to use that capital sum to purchase a new home for herself.

In challenging that ruling before the Court of Appeal, the husband’s lawyers pointed to his parents’ intention that the property would ‘remain within the family’. The wife had substantial assets and earning potential of her own and it was argued that the decision took no account of the husband’s accommodation needs and the interests of other beneficiaries of the trust, including the couple’s children.

In dismissing the appeal, however, the Court noted that the wife had contributed to the restoration of the farmhouse and would have expected to continue living there into old age had her marriage remained intact. But for the existence of the trust, she would have been entitled to half the property’s value under the ‘sharing principle’ which is applied in most divorce cases. There was also evidence that the wife’s lump sum could be provided to her without the farmhouse being sold.

For advice on any aspect of the law dealing with relationship break-up, or the protection of family assets, contact our team and we will be happy to assist you 01639 885261

 

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.