Divorce Issue.

[Boilerman1]

My parents bought a flat and put it in my name(on deed),this was before I met my wife . .they rent it out and I've never had a penny from it. .if I divorce my wife will she have a claim on it ?

[AuntLydia]

A) Is it only you on the Deeds or are your parents on also
B) Do they rent it out to a Tenant or do they rent it from you
C) If its yours alone it is an Asset and therefore will be taken into account in any divorce proceedings
caveat: I'm not a solicitor but have experience of this through years in Estate Agency and Management.

[woofgang]

If you own it in law, then its part of your assets and she will have a claim.....do you know why they put it in your name? It seems an odd thing to do.

[Boilerman1]

They put it in my name to avoid inheritance tax they live in their own house..it's rented out to a tennant.Thank you.

[AuntLydia]

Woofgang there is nothing 'odd' about it. Buy a property put it in your sons name live in it (that's why I asked if they rented it to a third party or lived in it themselves) Care home cost avoidance & Capital Gains avoidance usually the reasons.

[AuntLydia]

Boilerman our posts crossed. If you are the sole owner of the property it is your asset, regardless of any income it brings you or does not bring you. In a divorce settlement the current value of the house could be taken into consideration when calculating your net worth. It would of been advisable to have at least one of your parents on the deeds.

[Boilerman1]

Thanks for that.Would it help to put my brother's name on deed?.The idea was to share property with him anyway.

[AKMild]

These sorts of situations can often be resolved through the use of a Family Trust. I suggest that you consult a solicitor specialising in Family Law.

[woofgang]

Aunt Lydia, if the parents are benefiting from it, either by lving in it rent free or receiving income,whoever's name its in, I think that councils can take it into consideration when calculating what they will pay towards care home costs.

[AuntLydia]

Boilerman Yes you would benefit from putting your brothers name on the deeds as Tenants in Common . Then potentially your wife may only have the right to a quarter of the value of the home, which ,depending on the market value of the house ,may be doable to buy her out if she laid claim to her share.

[Buenchico]

If your parents are receiving any benefit from the property (either by living in it or, as they're currently doing, getting the rental income from it) then by putting the property into your name they've made a 'gift with reservation'. Such gifts are NOT covered by the Inheritance Tax rules on outright gifts and continue to be included in the benefactor's estate without limit of time.

i.e. the flat will continue to be included in the value of your parents' estates even if they both live for many more decades. (It will make no difference whatsoever if your brother's name is added to the title register either).

So your parents definitely haven't found a way around the Inheritance Tax rules but it's possible that they could indeed have given you a problem with your ex's claim on your assets if you were to divorce.

However when a court has to decide how to split a property which the couple were actually living in, the contributions made by both partners (e.g. by contributing towards the mortgage payments) would be taken into account. As your wife has had absolutely nothing to do with the flat at all, a court might rule that she had no financial interest in it.