Prenups, parents and pressure

homeownership, inheritance

Prenuptial agreements are becoming increasingly popular, and parents appear to be the driving force behind it.

With house prices relentlessly on the rise, many young couples find it very difficult to buy a home for the first time and some are turning to their parents for help. However, recent reports from The Guardian and the Daily Mail suggest that their parents may be wary of lending their children money.

Once a couple have married and begun paying a mortgage, they both have a right to claim a share of the house in the event of a divorce, regardless of how the deposit was paid for. If one spouse’s parents contributed what may be tens of thousands they may be very concerned by the idea of some of that equity going elsewhere.

As a result, many parents have demanded that their children sign a prenuptial agreement, commonly known as a ‘prenup’, before they agree to help them buy a home. These documents set out how various assets, such as the house and finances, will be divided if the couple divorce. If one set of parents has helped the couple secure a home, prenups can provide assurance that their child’s husband or wife will not unduly profit from a sale of the house.

Unfortunately prenups are not legally binding, despite a recommendation by the Law Commission to make them so. Judges will use them as a guide when they divide a couple’s assets but they are under no obligation to make a ruling in line with the terms of the agreement.

But while prenups are not a guaranteed form of legal protection, they can inform a judge’s decision. If your son or daughter needs your help to buy a house, it may be worth talking to them about a prenuptial agreement.

Where a prenup is going to be put in place it is essential that due consideration is given to making a new will.  There are good reasons for this. Firstly, a prenup will by definition be a precursor to marriage or a civil partnership. Both of these events invalidate any existing wills, so they will need to be replaced. Secondly, the whole point of having a prenup is to protect assets that have been acquired or accumulated prior to the marriage or civil partnership, with the aim of preventing them from being dissipated should the relationship break down.  Therefore, it is essential that those same assets are protected on death to ensure they go to those you intend. If you die during the marriage and there is no will in place then your husband, wife, or civil partner will stand to take the lion’s share of all your assets, whether they have been protected by a prenup or not.

When it comes to such a sensitive and potentially volatile issue, legal advice is essential.

Photo by meg via Flickr

Duncan Watson

Duncan is a solicitor who works across the Stowe Family Law’s Harrogate, Wetherby, and Leeds offices.

He advises clients on wills, estate administration, probate, tax, trusts and lasting powers of attorney.

He has written several articles in legal publications and is a contributing author to a forthcoming legal textbook.

View more from this author

15 comments

Andrew - November 17, 2015 at 5:10pm

Pre-nups are not binding but I see no reason in principle why parents should not lend money to their own child to buy a property on terms that the debt shall be repayable if that child divorces, the other spouse acknowledging that his or her rights over that property are postponed to the rights of the parents – which would then be binding.

JamesB - November 18, 2015 at 3:38pm

Its about time the baby boomers took some responsibility for the mess that they created with dodgy divorce law and overpriced houses. They should also be forced to open their spare bedrooms at a reduced rate to single mothers to reduce the bill on the state of all the rights without responsibilities that they have been peddling since the sixties.

JamesB - November 18, 2015 at 3:42pm

About all of the grammar and spelling errors in previous post, I was rushing. I think it possible to read it and understand what I meant though so I wont correct it and re post it now.

JamesB - November 18, 2015 at 3:43pm

Doesn’t make my points less valid either, although a judge or lawyer would argue so, they do tend to win arguments on irrelevant points which does tend to undermine the idea and point of good law.

Andrew - November 18, 2015 at 5:24pm

JamesB: Are you seriously, seriously suggesting that any homeowner, of any age, of any family status, should be forced to take a lodger at a reduced rate or any rate?
.
Compulsory billetting ended shortly after the Second World War, James, and it’s not coming back.
.
As for overpriced houses: have you heard of supply and demand? If you want to say: break NIMBY and SOBBY (Some Other Bugger’s Back Yard) and get house-building going, with a statutory prohibition on new property of BTL – join me. Otherwise, come off it.

JamesB - November 19, 2015 at 11:02am

I agree it is about supply and demand. I would rather more people lived together than concreting over everything with flats. Which is what the issue is with the article and why the parents are doing the prenups, better to sort out the cause. Thatcher like following the market isn’t the way to go I suggest.

Things were better with a happier society with compulsary billoting. Like the railway children the machine gunners (books) the lion the witch and the wardrobe plus all the stories etc. That generation seemed to love it I think perhaps is a good idea and more on the right lines than your idea of building more and more flats and letting people do as they please.

JamesB - November 19, 2015 at 11:08am

Perhaps would have better social cohesion and less voluntary apartheid that way also. Bring back modern Work Houses for people who use the cms also.

JamesB - November 19, 2015 at 11:25am

There is a housing issue in the country when there are so many spare rooms it is not so logical and is an example of the market having issues.

Its like the film as good as it gets. Encouraging people to take lodgers in the same way as Jack Nicholson was encouraged to look after the dog.

Perhaps due to lawyers, whatever people don’t tend to trust so much any longer and we need something like what I suggest done to make more people more happy. Rather than more private contracts with more people living alone which is the proposed outcome of this article and your solution of building more to meet demand and supply more. Thanks for the discussion though.

JamesB - November 19, 2015 at 11:26am

Things aren’t so bad but they could be better and we need to keep looking to make things better rather than trust the politicians to do so, especially after things like them introducing the CSA and going into Iraq.

JamesB - November 19, 2015 at 11:59am

Expecting the ex and non resident parent to pay for single parents is out of order. If the government don’t want to pay then that is up to them, but to put the bill with the nrp is crazy policy as it encourages society breakdown and single parenthood. Women after having children frequently don’t want the father around, especially with the post natal depression and wealthy difficult parents that many have and giving them financial encouragement to separate as the government do is not good policy and not good at all. All of the policies I have put in here are better. Politicians following with sinple solutions rather than leading with thought through solutions is the issue.

The rich getting richer and the poor getting poorer is the problem that needs addressing, the breakdown of social mobility as marriage declines with lack of credibility with divorce on demand encouraged.

We do need more positive solutions to bring people together rather than support them being apart. Supporting families after breakdown as per the MCA 1973 etc. encourages them to breakdown, which is why the 1999 act was scrapped better more comprehensive thought through solutions, such as those above, are required.

JamesB - November 19, 2015 at 12:09pm

Just blaming the men and putting in place cms is crazy and very unfair. It is a society issue and society should sort it out rather than trying to push it to the family which is not working, people should need to live together rather than need benefits to pay the rent.

JamesB - November 19, 2015 at 12:25pm

Especially where there is a lack of extended family support and where young families struggle to bring up young children in such situations and can break down under the difficulties they need support to stop them breaking down rather than support afterwards which is encouraging it.

JamesB - November 19, 2015 at 12:30pm

More joined up thinking rather than patch up solutions like the csa and Iraq which in isolation make the problems worse than by not undertaking them.

Andrew - November 19, 2015 at 5:50pm

James: you have watched too many films about how wonderful it was to have town children or soldiers billetted on you. It wasn’t. For them or for the householder.
.
As for spare rooms: when the children grow up and move out and what were their rooms become studies or hobby-rooms or guest-rooms that is not under-occupation; it is different occupation. My son’s former room is now full of my books and I am at this moment pounding the keyboard on it. And sometimes a guest sleeps in it. Do you suggest that that should be forbidden if some government body thought I should be made to rent it out at a price fixed for me?

Luke - November 25, 2015 at 1:34am

I think we need an experiment to test this. I think Andrew should be forced to take a lodger and JamesB should be forced to be that lodger !
.
Marilyn as arbiter can set the weekly rate of this contract 🙂

Leave a comment