Our son is soon to get a mortgage to buy his own flat and also expects to get married in a year or so. We have seen others having the unfortunate experience of loosing most of their savings after a divorce. Since the divorce rate is so high these days, we thought if I or my wife were put down as 'owners in common' on our son's property deeds, then a future spouse could 'not' walk off undeservedly with half of our son's property value. Which would include his life's savings invested in the flat.
I am 65 next year and my wife is now 60, So I hope to make a claim for the State Pension for both of us quite soon, which will be our sole source of income.
But if we (my wife and I) are put down as *part owners* of our son's flat on the title deeds, will that then be considered that we ourselves actually 'own' half the substantial savings our son will invest in the new flat? Because if this is the case, might it not considerably reduce, or eliminate any State Pension that might otherwise be due to us?
Mike thanks for your response. Yes, sorry that should have been Pension Credit I was talking about. Perhaps I should mention that we do own our own house and would not be living in our Son's flat.
I can see so many complications with this that I would have to say that you *need* to consult with a qualified lawyer (which I am not). To be effective, you would need to have beneficial ownership of your part, which, I suspect, means that, between you and your son, you would be taxed on the market rent on that part whether or not he actually pays that rent. I think you would also be liable for capital gains tax (as an investment property) on sale and for inheritance tax. Having a two or three way trust, or having a trust of trusts, owning the property can only cause complications. You should also consider what happens if one of you becomes mentally incapable; I believe you will need an independent attorney for each such member of the trust, before you can sell.
If you go into care, the value of the property will, I assume, be used in the means test to determine whether you can pay your own fees.
Set against this, my understanding that current divorce settlement policy was that the split should be based on the relevant contributions and sacrifices (after considering needs of any children). So, with a late short marriage, the balance should be close to that of the initial capital input. I also seem to remember hearing that there is a trend to taking into account pre-nups. For a longer marriage, a low earning wife may be considered to have sacrificed income to run the home and her emotional support to have contributed to the husband's earnings. You should be talking to the lawyer about whether the risks you perceive really exist.
The other thing to consider is that, if the marriage does last, the wife will have an increasing moral right (not used in any legal sense) to the joint wealth, for the reasons given above.
Also, as you are not living the house, I suspect that the part owned by your son would still be splittable in the divorce settlement. My guess is that, if you held out, they would give residence to one party and require them to pay market rent to the other one.
This is definitely not legal advice, but hopefully identifies enough potential problems that you will seek such advice if you want to proceed with this idea.
This isn't an advisable thing to do. Ever. As it's based on an intended deception.
When you apply for Pension Credit you will be asked to declare your assets.
Supposing that prior to this your son has already gifted you a half share in his flat. Regardless of your or his motives for doing so
If when applying for Pension Credit you don't declare your interest in this flat, then you will be breaking the Law. If the matter ever comes to light you will be required to pay back any Pension Credit paid, regardless of the fact that you never actually owned any part of the flat at all.
Neither can you declare it, and claim that you don't actually own it, but that should your son subsequently divorce you will then "pretend" that you owned it all along.
Do you see my point ?
A possible intent to decieve cannot ever be used as a justification for anything - certainly where dealing with Govt Departments is concerned anyway.
Your son will simply have to be more selective in his choice of partner to share in the raising your grandchildren, I'm afraid.
It's true that she couldn't get your share, but she could get half, or more likely all, of *his* share.
And also the taxman will regard his occupancy of your share of the house as a "benefit in kind" for which he should pay you the market rent, and so they will assess you for the income tax on this imaginary rent. And then, when you die and he inherits your share, he will pay inheritance tax on that. Or if you give him your share before you die, you will have to pay capital gains tax on its increase in value. It's not a good idea.
However, your problem is a common one which I too expect to face soon enough. I have concluded that in the current legal climate there is only one bulletproof solution. Your son should *not* marry his girlfriend unless either (i) she is bringing an equivalent financial contribution to the marriage; or (ii) he is prepared to wave goodbye to half his property, and probably much more than that if they have children.
If they (or rather, she) insist on getting married, suggest your son uses some other method to protect his capital. Pre-nuptial agreements are these days becoming quite common and the divorce courts do pay some attention to them (though AIUI they don't regard them as legally binding).
Or he could put the house in some kind of discretionary trust with you as trustees.
I do not normally say this on this group, but it is probably worth taking professional advice on this. But *not* from a high street solicitor. Find a qualified trust and estate practitioner. (see
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Well, you'll own the fraction of the flat that the agreement says you own, anyway. Doesn't have to be half. And it'll be net of the mortgage debt.
Pension credit, yes. Also it would compromise your entitlement to local authority funded long-term care. As well as the disadvantages I listed above. Don't do it.
On a more positive note, the number one cause of divorce is marriage. Sure, can get a pre-nup agreement. Which some would consider an insult and others wonder about how long the marriage will last. And yes, some marriages last a lifetime. Even if they never come back from the honeymoon. Or reach 75+ years of marriage.
Your son will take a risk. You could always buy a property sharing with him and later any new wife. I don't recommend it, in laws under your feet can be quite stressful on a marriage. Yours and his. Or can simply let him take his own risks. He has more options available than you do.
You mean that your son will be paying the larger part of the cost of the house? If they are not married, why cannot they own it as "tenants in common" with the proportion of ownership being in proportion to what they have both paid? That would seem the natural thing to do.
Once they get married and the house becomes the matrimonial home, the court has wide powers to override the ownership proportions if a divorce takes place.
i don't see that the OP has any business owning part of the house unless he has contributed financially to its purchase.
Will have disastrous effects if one of you goes into a home. They won't charge the deeds of any house the other spouse owns and lives in, but they will on this one.
yes made by two people, but quite often the dominant partners 'works' on the other and swings the other half's opinions around to the 'right' direction, wouldn't you say?
The value of a property you own but don't live in is usually counted as capital for means tested benefits purposes. Almost certainly the case for pension credit.
Falling property prices will probably wipe out his equity anyway so there'll be less to fight over ;-)
I am pretty damn sure that if you lined up 100 men, and presented each of them with a visually attractive prospective wife who said up front "after marriage, I am going to become a housewife, I will cook meals for you, make sure you get all you need in bed, and keep the house tidy, and because I will not do anything to learn any skills or do any outside work, but I will be after a horse, stables, a 4x4 to go shopping in, so I will totally depend on you financially so if we break up you will be taken to the cleaners with maintenance" how many would go for it?
Sure, some would. But only a few of the really thick ones.
Divorces in these "high dependency" situations result in the most bitter ex wives who screw their husbands as much as they can and continue their bitterness for years and sometimes decades. If there are no kids, it's not too bad because - finances aside - you can just tell her to stick it and avoid all contact. But if there are kids, it's really bad. And pregnancy is practically entirely in *her* control.
I would strongly caution any man with more than half a brain to be really careful. Always pick a woman who can stand up on her own feet, has some skills and some initiative, and do not go for the "traditional housewife" approach. The place is full of women who look to a marriage as a protection from the outside world, and there are plenty of men who mostly-unwittingly fall for it. Many years ago, I was one of them...
Regarding the original question, I wonder if a trust can be set up which would own the house. Years ago I looked into this, in a different scenario, and one of the big problems (with a "lifetime trust") was what happens if the beneficiary predeceases the settlor. In this case it is unlikely (a young man) but obviously possible. Last I heard on that one was that a certain type of non-UK trust would solve that problem because it could just be cancelled and the man who put the money in could just take it back out again. But I never investigated it because finding specialists in the field was hard.
If the settlor goes into council care, after something like 7 years following the transaction, there is no problem.
Wealthy families routinely use trusts in this way to own old family businesses, to prevent the business being gradually trashed as various family members divorce over the decades.
Moreover, English divorce courts have been happy to order the trustees of such trusts to hand over the trust's assets to the ex-wife. So it didn't really work.
However there has been a very recent decision in Jersey (Mubarak v Mubarak IIRC) where a court has decided the trustee has no power to give the trust's assets to anyone other than the originally nominated beneficiary, even if a foreign divorce court orders him to do so. So it may be that Jersey is in for a bit of extra trust business in future.
I cannot see how Joe Bloggs, *not* being a shareholder in the family business but merely being a Director, can have any part of the business valued as a matrimonial asset.
If he was a shareholder that would be completely different. Businessmen get fleeced through this system all the time - the valuation of even a small business can easily exceed everything else the divorcing couple have, so he comes out keeping the business but she gets everything else. That was the deal I got.
But just working in a family business which is held entirely in a long standing trust, I cannot see hot the trust assets could be raided.
The devil is going to be in the detail. If the Director had some kind of an unconditional deal guaranteeing his salary for X years, a value could be placed on that income stream. Etc.
I have bumped into a number of divorcing/divorced women who were bitter that their ex had "filthy rich parents" and she "should" have got more because of that, but I don't know of any case where that actually worked. Potential inheritance perhaps - what is the latest case law on that rather dodgy subject?
That sounds exactly right. Trust is a trust. The trustee is personally liable if he acts out of order.
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