Posted on 12.2.13
Did you know that Valentine or Valentinus, was imprisoned and sentenced to death for performing weddings for Roman soldiers, who were forbidden from marrying? Whilst in jail, Valentine allegedly healed his jailer’s daughter and just prior to his execution he wrote a farewell note to her signed ‘From your favourite Valentine’. Subsequently, Valentine was made a Saint and is associated with romantic gestures and the day named after him.
Today, St Valentine’s Day has become one of the most popular days of the year to propose.
But amid the romance, how many people enter into a relationship with their eyes wide open and think about how their relationship might affect their families?
Last year’s Valentine’s Day was full of romance and excitement when Tom proposed to Tara, his girlfriend since student days.
The couple has been renting a flat for 18 months, and before they get married next summer they would like to buy a house. They know that they are able to afford a mortgage, but are unable to find between them the £30,000 to put down as a deposit.
Tom’s parents Jim and Lyn have indicated that they would be able to give or lend them the deposit. Before they commit to this act of kindness, asked their solicitor whether there are any pitfalls to consider, who advised them to consider the following factors:-
- If they are not giving an outright gift, what would their views be if Tom and Tara split up and they could not recover their money?
- What would happen if Jim and Lyn hit hard times and needed the money back and Tom and Tara couldn’t put their hands on the cash to repay them?
- If Jim and Lyn make an outright gift to Tom and Tara, would they not want to treat their other 3 children in a similar manner and could they afford to do this?
- If Jim and Lyn are in the Inheritance tax bracket (jointly owning assets over £650,000 including their house), would a gift affect their affairs and would it actually help their long term tax planning?
- If they are making just a loan, as opposed to an outright gift, how do they secure it? Will they want repaying the initial amount loaned? Is interest to be added and at what rate?
- Might a Declaration of Trust and a properly drawn up legal charge be required to secure their loan?
- Would a Will be required with a provision in it, so the other children are left an additional share of their estate equal to the amount being given to Tom and Tara, with a formula to index link the amounts to allow for inflation?
With all these considerations to weigh up, Jim and Lyn are not getting drawn into the wedding arrangements, which is being managed by Tara’s mother Chrissie.
Tara’s father Ben, however, is preoccupied elsewhere, as he observes two other love birds in his family. Ben’s widowed father Jack aged 66, is the chairman and majority shareholder of the family business. Jack has been seeing Judy, who is also widowed and has three teenage children of her own.
Jack has hinted to Ben that he and Judy might be making an important announcement this Valentine’s Day.
Ben, who was very close to his mother Diana before her death, admits that he is hurt by his father‘s relationship with Judy, but on the other hand, he wants his father to be happy.
Deep down though, Ben’s is fixated on the thought that Judy maybe after his father’s money and shares in the business. Needless to say, he feels that he and his sisters and grandchildren may lose out from inheriting the assets that Jack and Diana built up, during what was a very happy marriage
However, Jack is actually very canny and in anticipation of potential problems, has already been in touch with his solicitor for advice on the legal implications of remarrying, especially when balancing the expectations or needs of all his children. As well as Ben, Jack has two daughters, Wendy, who is also a shareholder and director in the business and Alice aged 33, who has Downs Syndrome and still lives with Jack.
Jack’s solicitor has drawn his attention to various issues, which Jack is addressing in anticipation of re-marriage:
- Making a Will in contemplation of marriage, with provision for his new wife on a life interest trust, with the capital on her death going to Ben and Wendy or their children and with special provision for Alice by way of a disabled person’s trust
- Ensuring that the family company has an up to date share holder’s agreement, so the surviving shareholders have the right to buy the deceased’s shareholder’s shares and to manage the company without any unwelcome interference from a deceased shareholder’s spouse or partner
- Seriously considering retiring from the business and handing his shares over to Ben and Wendy, so he can enjoy his retirement with Judy and lend continual support to Alice
- Entering into a prenuptial agreement and/or a cohabitation agreement with Judy, with formulae inserted for how any disputes might be resolved, should the relationship breakdown
- Taking advice on inheritance tax, especially with regard to Business Property Relief and the Transferrable nil rate band
- Taking advice on whether any of Judy’s children could become classed as children of Jack’s family and potentially able to bring a claim for financial help from his estate, if not provided for in Jack’s Will
As you can see it is vital to get good legal advice from a solicitor and act on that advice otherwise things can become seriously unstuck.
At Gorvins Solicitors advice is available on all the issues touched on above.