Preserving Family Wealth: Ensuring financial gifts remain in the family

As parents, we want to do everything we can to support our children. Often, this support takes the form of financial support, whether it's contributing to their education, helping them purchase a home, contributing to childcare costs or even providing them with start-up funds for their business. However, in the event of a relationship breakdown, the question of how to protect these financial gifts from being divided in a divorce can arise.

Educate families about the legal implications of financial gifts: A financial adviser can explain the legal aspects of gifts and how they are treated in divorce proceedings. This can help families make informed decisions about how to structure their gifting arrangements.

Structure gifts as trusts: Setting up trusts for married children can provide a secure way to protect assets from divorce. Trusts can be designed to ensure that the gifted assets remain under the control of the intended recipient.

Consult with family lawyers: In complex situations or when large sums of money are involved, consulting with family lawyers is recommended. Lawyers can provide expert advice on estate planning and asset protection strategies that align with the family's goals and risk tolerance.

Regular reviews: Your financial adviser should regularly review any gifting arrangements and estate planning documents to make sure they remain aligned with your family’s circumstances and goals. As life events occur, such as additional children, changes in marital status, or significant wealth accumulation, the plans should be revisited and adapted as needed.

While legal protection is essential, it is equally important to remain open and have honest communication with your married child about your financial arrangements. Discussing your intentions and the reasons behind your decisions can help avoid misunderstandings and foster a sense of trust and appreciation.

At Ginkgo, we encourage clients to let us arrange and host family meetings where we can help you develop plans to protect your family’s wealth. If you would like to set up a meeting please do get in touch.

By Daren Wallbank

Trusts are not regulated by the Financial Conduct Authority
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 12/01/24.