ASK THE EXPERTS
TURCAN CONNELL’S LINDSEY OGILVIE JOINS US TO ANSWER A QUESTION ABOUT FAMILY WEALTH
WHAT STEPS SHOULD YOU CONSIDER TO PROTECT FAMILY WEALTH AGAINST POSSIBLE FUTURE MARRIAGE BREAKDOWN?
ANSWER: In Scotland we benefit from a clearly defined statutory concept of ‘matrimonial property’ or ‘partnership property’ in relation to which a claim can be made in the event of a couples’ separation. In the same vein we benefit from a degree of certainty in relation to the assets which are excluded from any such claim. These excluded assets include any gifts from a third party (gifts between spouses or civil partners are in the ‘pot’) or inheritance as long as any such gift or inheritance remains in largely the same form. Also excluded are any assets owned by either spouse before the marriage. Such assets are ‘safe’ so long as they remain in their original form. However should a party purchase an asset with the funds or invest in matrimonial property, the otherwise non matrimonial property has been transposed into the matrimonial ‘pot’.
Parents wishing to pass on wealth to the next generation, whether land, a home, cash or investments, should take careful advice to ensure such gifts are protected. A recipient child who seeks to use their inheritance to purchase an asset during their marriage/civil partnership will wish to avoid inadvertently exposing their inheritance to a claim.
The options available range from the most basic documenting of intention (as a gift to their child alone and not as a joint gift to child and partner/ spouse) to contracts or Minutes of Agreement whether between parent and child (we assume a child over 16) and/or the child and their partner/ spouse. Pre-and Post-nuptial Agreements are an important and effective tool in a family’s armoury to ring fence wealth, and contrary to popular belief, enforceable, so long as proper advice has been secured.
Forewarned is forearmed – far better to secure family wealth and make mutually acceptable arrangements from the outset rather than face potentially very difficult discussions, and indeed court action which might have been avoided with a little forethought.