‘I want to gift my son a house deposit, but I’m worried his fiancee will get half if they divorce’

Prenuptial agreements are sometimes entered into by couples who wish to manage and agree before they wed how certain assets may be divided up upon divorce. There are certain requirements for such documents to be considered valid in law and in any event in the UK they are only said to be “persuasive” on a judge looking at a divorce settlement, and not legally binding. 

Certainly, whilst assets acquired during the marriage, as opposed to before it, are more likely to be shared on divorce, the reality is your gift could well be vulnerable if it were made on an outright basis. Asking your son to ask his fiancé to enter pre-nup may be an awkward conversation for you to have.

A more nuanced approach would be to make a gift into a trust arrangement. You and your wife could be trustees along with your son, which means you would retain control of how the capital is spent.  You could invest the capital in a house, but secure the capital back to the trust by way of a mortgage over the property. That way, upon divorce, the mortgage would be a debt of the marriage due back to the family trust. 

Successive Chancellors of the Exchequer of either the red or blue team have taken swipes at trusts in terms of making the administration regime more complicated. I assume they do not like how useful trusts are to protect wealth. This means there are traps for the unwary in running trusts, including a requirement for registering them with HM Revenue & Customs, completing a tax return and for so-called discretionary trusts exit charges and ten-year anniversary charges. However, for you and your wife to have peace of mind that you have protected your gift as best you can, I expect such issues are a price worth paying. 

Also, trusts should be flexible in nature, so as life moves on, you could release your grip in a manner you feel comfortable about, such as by appointing capital to your son and his wife. Indeed, for the long-term estate planning purposes of your son and his wife (hoping she remains so), you creating a trust now may well be something they both thank you for when they reach your age and have similar dilemmas to your own about how to pass on wealth down the family.

Ask a Lawyer is written by Gary Rycroft, solicitor at Joseph A Jones & Co, and published twice a month on Mondays. Email your questions to askalawyer@telegraph.co.uk

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