Protecting inherited equity in case of divorce

[MakemeaCake]

One of my DCs is looking to buy with their partner when they each sell their own homes.

My DC inherited a reasonable sum from someone in our family and we are also going to add something to this for the house purchase.

They are going to set up a Deed of Trust when they buy, but my concern is if they marry and then divorce.

Can they hold onto their equity which would far outweigh the other person's? Or would it all be split 50-50 in a divorce?

It would depend on their circumstances during the marriage and upon divorce. A long marriage, or a marriage where their spouse had sacrificed their own career to raise children or was going to be the resident parent after divorce, and it’s very unlikely the original equity split would be taken into consideration. A short marriage with both parties in a more equal footing and pre-marriage considerations may be taken into account. In short, if you want to protect your assets and make sure you don’t have to share them, the best option is never to enter into a legal contract where the sharing of assets is the principal purpose.

The only safe thing to do if you want to be absolutely sure is to not get married. You can’t get married on a “what’s yours is mine and what’s mine is mine too” basis. Courts don’t like it if couples hide or shield their own assets.

Contrary to the above answers, it is possible to protect assets. If they decide to get married, she should look to replace the deed of trust with a pre-nuptial agreement. The courts will generally uphold properly drawn up pre-nuptial agreements provided certain conditions are met.

Thank you @prh47bridge.

After researching last night, that is what I found.

Other posters- marriage gives protection if there are children involved which is why women on this forum are advised to marry rather than live together.

@MakemeaCake

Thank you *@prh47bridge*.

After researching last night, that is what I found.

Other posters- marriage gives protection if there are children involved which is why women on this forum are advised to marry rather than live together.

Well yes but the principle protection marriage gives/reason MN is keen on marriage is the sharing of money in the event of one party giving up their career to raise children. You can't really then have it both ways in wanting 'protection' ie access to spouse's assets and income after divorce without also wanting your own assets and income to 'count' as marital property. A nuance that MN doesn't often share (MN, black and white, who'd have thought it ) is that if the woman is the higher earner and/or brings significantly more money into the marriage, getting married does little to 'protect' her and could in fact lead to her having to give the man some of her money/property in the event of a divorce.

Although as prh says they could enter into a properly legally drafted pre-nup which is the closest thing we have in this country to an enforceable agreement (providing conditions are met, don't just scribble it down on a piece of paper as that is unlikely to hold water), but the provisions have to be reasonable, it's unlikely to be upheld in a court if for instance it leaves one party homeless and without the ability to rehouse themselves. Or as others have said, if this is your DD we're talking about and it's her inheritance, she could be better off not marrying and also not giving up work for any DC depending on her career/income etc - of course she may want to marry anyway for personal/religious/whatever reasons but don't blindly advise her marriage is always best if she has DC based off some dodgy MN 'advice', it isn't quite that simple always...

Does a Deed of Trust become invalid once married? Friend of mine had one drew up and has since married. When her and her DH split for a while she was convinced it would still stand despite a long marriage

@Muchmorethan

Does a Deed of Trust become invalid once married? Friend of mine had one drew up and has since married. When her and her DH split for a while she was convinced it would still stand despite a long marriage

Disclaimer, not a lawyer, just an interested party. I also assume you are talking about the law in England?

As I understand it, a deed of trust setting out how a property is owned in shares/%s as tenants in common doesn't become invalid on marriage per se, just like how other forms of property like cars, boats, businesses don't suddenly change ownership on marriage. However, a deed of trust doesn't necessarily stop the house being considered as part of the 'pot' to be divided in the event of a divorce. To take an extreme example, a wealthy woman and a poor man buy a house, to reflect unequal contributions they decide she will own 99% of it and he will own 1% and they enter into a deed of trust accordingly. They then divorce, his 1% of the house will barely leave him able to house himself while she gets to keep the house. It might be that other assets can be divided so that he can be given correspondingly more cash to rehouse himself in which case the wife could keep the house, assets aren't necessarily always divided 50:50, it depends on circumstances but if all the cash is tied up in the house and the husband would walk away with effectively nothing if the deed of trust was stuck to, that would be unlikely to be seen as fair...

The courts will look at the deed of trust, particularly if it has provisions about what should happen on marriage, but it will not be conclusive. Welfare and housing needs will carry greater weight, particularly if there are children. A pre-nuptial or post-nuptial agreement is more likely to be upheld.