16 September 2016
Rise in Parent-Influenced Prenuptial Agreements
British couples are increasingly entering into prenuptial agreements because their parents are looking to protect the money they investment in their children’s property.
Each year more than 250,000 parents help their children get on the property ladder by putting money towards a house deposit. According to the Daily Mail, some of these mums and dads want to protect the money they are gifting to their child with a prenup in case their marriage ends in divorce.
Prenuptial agreements are seen as a way in which money invested by ‘the bank of mum and dad’ can be protected. Although not legally binding, prenups are still a useful tool in financial planning as they are given legal weight by courts in deciding how assets should be divided when a marriage ends in divorce.
With so many young people struggling to buy their first home parents are increasingly helping out their children by gifting money, with some even re-mortgaging their houses to assist. It is understood that as parents put money into their child’s marital home they want to ensure that their investment is ring-fenced for their child in the event of a relationship breakdown.
Commenting on the tie between parents investing money in their children’s property and prenuptial agreements family lawyer Holly Tootill said: “Almost every one of the prenups suggested by parents have followed their gifting of money to a child or their planning to do so by inheritance.
What we are seeing is not just a rise in the number of couples looking to regulate their financial affairs before marrying but a subtle change in who [is doing so] and, particularly, why.
“Previously, prenups were regarded almost as the sole preserve of those with wealth… Now, there would seem to be a far wider spectrum… perhaps most notably of all, young couples who are doing so at the suggestion of their parents.”