Karen Moores, family law partner at Sydney Mitchell explains why family members are increasingly losing out when couples divorce.
I have noticed the increased involvement of other family members, generally parents, in proceedings which follow a relationship breakdown. When I was first in practice this was the exception and whilst it still does not occur in the majority of cases there is an increasingly significant minority of cases which involve the parents of one spouse or the other in the financial applications arising from divorce proceedings.
When monies are provided to children or grandchildren there is rarely a discussion about the terms on which the money is provided and this can cause real difficulties later on when the child concerned is purchasing a property with a spouse. Little or any discussion is entered into about what will happen if that relationship breaks down and this is causing increasing difficulties in situations involving family breakdown.
All too commonly in those types of cases parents take the view that they are providing their children with the benefit of financial assistance. It follows as a natural consequence that the child’s spouse will also benefit but if asked the direct question as to whether the money should be divided between the child and their spouse if the marriage broke down most would, understandably, answer "no". It is not unreasonable to feel that the money is available for your child and not for distribution between them and their spouse if it all goes wrong. But where there is no discussion and nothing put in writing this situation can all too often lead to the couple and one set of parents fighting over the money in front of a Court.
As with many areas of law these types of difficulties can be avoided by taking legal advice before advancing the money and ensuring that agreements about the provision of the monies are set out in writing.
Likewise for those who have built up successful businesses, it is not uncommon to consider transferring an interest in the business to a child or children as part of tax planning in later life. However, consideration needs to be given as to whether it would be better protection to tie the business interests into a trust rather than directly gift to children. Once again, in the event of divorce, assets that are not directly held by the children can potentially be protected from division by the court.
The advice is that whenever gifts are being made from family monies you should take advice as to the best way to protect that for future generations should the worst occur. Sydney Mitchell has one of the largest specialist family law teams in Birmingham. If you require advice on any aspect of family breakdown or protection of assets for the future we have specialists at each of our offices in Birmingham City, Shirley and near the airport.
For further information on this article or any family law matters, please contact Karen Moores on 0121 700 1400 or fill in our online enquiry form.
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