I read about a survey last week which suggests that an increasing number of parents are reluctant to leave money to their married children in case they get divorced and the other party gets their hands on a chunk of it.
The research shows 35 per cent of parents had concerns and did not want to leave assets to their children for fear some of it might be siphoned off by an estranged partner in any settlement. This was brought fully into focus for me when one in four parents said they had doubts whether their children’s marriage(s) would last.
Of course, marriage is a legally binding union. Couples have responsibility for, and a claim to, their partner’s assets once legally wed. If they split, a settlement takes account of the joint assets and how they should be split fairly. An inheritance would inevitably form a part of the pot to be divided.
In this day and age, with so many marriages ending in divorce, it’s an understandable concern for parents worried about their offspring’s marital status. However, is it not a bit of an extreme measure to leave nothing just in case someone else gets some of it further down the line?
The issue is not impossible (read more here about protecting your wealth) to get around and safeguards can be put in place to ensure that an inheritance stays with the intended beneficiary. The most obvious way is through a prenuptial agreement. Agreed in advance with both parties properly advised, it sets out any specifics that need to be taken into consideration if there is a split, like exempting, for instance, any inheritance from a parent. Whilst not yet 100% legally binding, there would have to be compelling evidence for a court to ignore it. There is also now case law backing the validity of measures set out in a pre-nuptial agreement.
It is interesting to note that the same survey showed 72% of parents said they would like to see pre-nuptial agreements become legally binding in the UK, as this would enable them to make gifts to their children, safe in the knowledge that if they later got divorced, the money would still benefit their child.
I have said it before and I’ll say it again - many people still perceive pre-nuptial agreements as unromantic and an issue to be avoided. My view is that they should be viewed like an insurance: you don’t get car insurance because you think you are gong to crash or have your vehicle stolen – but just in case you need it. However, there does now seem to be some momentum gathering for the law to be changed to make them legally binding in the UK as they are in other countries. This latest survey surely backs the view and I hope that change comes soon to give people more faith in their value.