My elderly parents transferred their house to me. Will this be taken into consideration in my divorce?

We are regularly instructed by clients who find themselves in a typical scenario where the parents of either the husband or wife have transferred their home to them, but remain living there.

This is done for a variety of reasons, including inheritance tax planning and it’s often assumed if a couple divorce that the parents’ property won’t be considered as part of the financial settlement.

When a couple divorces, the court is able to exercise its discretion as to how the couple’s assets should be divided and assesses everything that is owned by them. The court will not automatically disregard any asset that is held by either party.

The first consideration of the court is the welfare of any minor child of the family. If the children can’t be adequately housed without bringing the parents’ property into the financial settlement then the court is likely to order that this must happen.

For example, if the husband has received a transfer of his parents’ property to his sole name then this could be taken into account by the court in deciding that the couple’s former matrimonial home must be transferred to the wife to provide a home for the children. The reasoning for this is that the husband has a property that he could raise a mortgage against, to assist in purchasing his own home, or sell or move into himself when his parents pass away.

On the other hand, if the separating couple are wealthy in their own right and there are sufficient funds available for homes to be bought for both husband and wife, then the court may feel that it is reasonable to ‘ring-fence’ the property. This means that it wouldn’t be considered by the court to form part of the matrimonial assets for division.

If the elderly parents remain living in the home then the court is likely to attempt to avoid a situation whereby the property must be sold. However, it is possible that the court could order that it must be sold, even if they are living there.

We would always recommend that anyone considering doing this kind of transfer or who has any concerns should consult a specialist solicitor first.

If you would like to discuss this or any other family law matter, please contact Janine Hutson on 01772 258321, or at janine.hutson@harrison-drury.com