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Protecting the Bank of Mum & Dad

Protecting the Bank of Mum & Dad

Recent research showed that more than a quarter of UK mortgages are subsidised by the buyer’s parents – the so-called ‘Bank of Mum and Dad’.

Enabling your children to get on the property ladder can be one of the greatest and most meaningful gifts that a parent can give. Often it is given to help a son or daughter buy a house with their partner.

But relationships aren’t always stable, and when your son/daughter’s relationship breaks down, the joint assets will need to be divided, and gifts from parents can often become part of the matrimonial pot. This means that their ex-partner could potentially leave with some of your money – definitely not what was intended!

Protecting your contribution

The Bank of Mum and Dad is the ninth largest mortgage provider in the UK – but without the same protections as a major bank. So how do you protect family contributions when relationships breakdown?

If your son/daughter is cohabiting

When it comes to property, cohabiting (unmarried) couples are reliant on land and trust law to sort out any disputes, and because these laws were never designed for the specific needs of cohabitants, the outcome of a relationship breakdown is often uncertain. With this in mind, it can stave off future conflict, and legal costs, if the couple’s intentions regarding the property are clearly recorded.

Consider a Cohabitation Agreement – a private contract between the parties setting out in what proportion the property is owned, on what basis it will be held, and what the parties will do with the property if their relationship were to break down.

If your son/daughter is getting married

Consider suggesting instead a Prenuptial Agreement (commonly known as a “pre-nup”). These are contracts made in advance of a marriage (and it must be at least 28 days in advance!) between the two parties getting married, and here again you can record your contributions to the family home and how it will be divided in future.

Pre-nups are not automatically enforceable in UK law – but they are highly persuasive factors when taken together with the other circumstances of the relationship. For example: if your son/daughter gets divorced two years after signing the pre-nup with no kids born, it will be far more likely that the pre-nup terms will be enforced than if they had been married for 30 years after and had three kids. Therefore it is advisable to review your pre-nups periodically.

At Sharp Family Law, we are experienced in dealing with the emotional and practical complexities of relationship breakdown, and so we simply cannot overstate the value of taking early steps to prevent disputes arising where possible. Please feel free to contact us for further information and assistance with preparing formal documents to protect your contribution – giving both you and your son/daughter peace of mind for the future.


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