How can I protect the cash I’m giving to my daughter to buy a home?

Question

I would like to give my daughter and son-in-law some money to help them buy a house.

The money will be a gift, but I don’t want my son- in-law to be able to take half of it if their marriage breaks down. Their mortgage company will not consider a joint tenancy. How else can I protect the cash?

SP/Twickenham

Answer

It is imperative that you seek legal advice with a view to structuring this contribution as a formal gift or a loan.

If the money is intended to be an outright gift to your daughter you should insist on a prenuptial agreement to ensure that the gift stays with your daughter if she and her husband subsequently get divorced.

 

As an alternative, you could consider entering into an interest-free loan agreement with your daughter and son-in-law. The terms of the loan could provide for it to be interest-free and repaid from the matrimonial assets in the event that they did divorce.

The full terms of the loan should be fully documented in a written, signed agreement. You could also consider having a charge over the property as security for the loan.

Sam Hickman is head of family law at Co-cop Legal Services.