For many families preserving their wealth to be passed onto successions is of high concern, an integral element of this is designing & implementing estate planning measures. However, we often find that in doing so, many are putting their wealth at significant risk, should their adult children get divorced.
In order to help you protect your wealth across multi-generations, we have detailed the 3 main actions that you can take to do so.
Often known as “pre-nups” have become synonymous with the likes of A-List celebrities, yet their use is actually very important for many. Some parents often make this arrangement a condition of a gift or advance.
Whilst there is currently no act of Parliament in England & Wales making these agreements binding, in practice they will be enforced so long as both parties freely enter into them, with full understanding of the implications. The agreement must also not lead to an outcome which leaves one party in real financial need.
These agreements will allow your children to protect the family wealth prior to marriage, they are often not implemented due to the lack of romance involved in planning a marriage breakdown before (or shortly after) a wedding. Yet the importance of them must be acknowledged & shared with your children, should you wish to make it a condition of future succession.
After marriage, a “post-nup” serves the same purpose as a “pre-nup”. With the same pros & cons, these agreements are often entered due to the prior conditions or though being in place before a wedding.
Whilst this agreement will work just as well, it is often much better to discuss & enter into an agreement 28 days before a wedding. To allow for all of the details to be outlined & for the initial stage of marriage to be enjoyed.
Parents will often loan their adult child finances for a range of reasons, including property purchases. What is often missed is clear clarification that this is not a gift & is in fact a loan. Should this child then seek divorce, it is important that there is a strong & clear agreement drawn up & signed. Ideally this should be a formal loan deed drawn up by a lawyer, which sets out the sum to be loaned, the purpose of the loan & detailed repayment terms & conditions.
Whilst no one wants to enter marriage thinking about the plan should they then get divorced, in order to protect family wealth, it is often crucial for you to encourage your children to take some of the steps above.