When Your Ex’s Parents Want the House They Bought Back
Buying a newly married couple a home is the ultimate wedding gift. When one set of parents buys a home for a couple, there are the usual wishes and hopes for their bright, happy future, with lots of grandchildren.
But not every story has a fairytale ending. So what happens if the marriage fails and the parents subsequently want the house back? Where does this situation leave you, legally speaking?
Marital versus separate property
When it comes to property distribution after a marriage has ended, the courts divide property into two categories – shared and separate property.
Shared property generally consists of all assets (tangible and intangible) acquired before and during the marriage, regardless of which party’s name is on the title.
Separate property generally consists of all assets (tangible and intangible) acquired before and during the marriage but held or owned by a legal third person, such as a trust, company or other person.
Before working out where the parties stand in terms of property rights, it’s important to determine who (or what) actually owns the property.
If the property is in a party’s name, the ability of the courts to deal with it is much more straightforward than when it is held by a separate entity. In that case, the courts may need to uncover the trust in question or “pierce the corporate veil” to deal with the property equitably.
Short-term or long-term marriage
The length of a marriage can have a significant impact on how the courts deal with marital property.
Generally, equal sharing rules apply to property owned by married couples, even if the property is only held in one of their names.
So, if your ex’s parents purchased a home in your ex’s name, you still have equal sharing rights to that property (although you may want to lodge a caveat on the title to prevent your partner dealing with the property before a court order is made).
And that is fair, considering you probably contributed to the mortgage, living and household expenses, and overall married lifestyle, during those married years.
If however your marriage lasted less than two years, the courts would rather see the property go back to who owned it prior to the marriage. In this case, if your ex’s parents bought the home for your ex, it’s more than likely to end up back with your ex.
These aren’t hard and fast rules, though – they are just the presumption. With quality independent legal advice and a strong plan, you can rebut the presumption and show the courts justification as to why you should be entitled to more.
Want to buy a matrimonial home for your son or daughter?
So what if you’re in the opposite situation as a parent, and you want to buy a home for your soon-to-be married son or daughter? Is it too risky?
It’s never too risky if you get the right legal advice and set up appropriate measures to ensure your child’s assets are protected.
These measures can include:
- A family trust arrangement: Where the property is held in a family trust and the child or the parents are beneficiaries of the trust assets. It’s important to note than duty is payable on the trust deed.
- A company: A company that appoints the adult child and/or parents as directors and shareholders may be able to hold the property, but it would need to be for a specific purpose, such as a business asset. This may prevent the courts from “piercing the corporate veil” and distributing the asset.
- A prenuptial agreement: Where the ownership of the property is subject to the terms of a pre-existing agreement that sets out what would happen to the property in the event of dissolution of the marriage.
- Buy the asset under their own name: That way, the property remains separate from the pool of marital assets and the parents maintain control over its ownership.
And remember, while there is a capital gains tax advantage if the property is bought in your child’s name, the negative side of that is that you can lose a lot of control – not to mention money.
At Amicus Lawyers, we can help you to develop a plan to ensure that everyone’s rights are protected and preserved in the event that things don’t go to plan. Have a chat with us today.