Many families are well advised to consider the lifetime transfer of assets through the generations to avoid Inheritance Tax.
The dilemma that faces the older generation in making such transfers, is the risk that their children or grandchildren may be divorced once that family transfer has taken place. The asset is then vulnerable to division or sale by a divorce court.
Help is at hand now with the increased recognition of Pre and Post Nuptial Agreements. If, for example, parents wish to transfer a particular asset to their adult child, such as a land holding, they could offer to transfer it on condition that their child and his or her spouse sign a Pre or Post Nuptial Agreement prior to the transfer. The Agreement would confirm that it is not intended that this family asset should be divided or sold on divorce and should remain the asset of the child to whom it was transferred.
The degree of protection offered by such an Agreement is now high provided all the correct legal formalities are observed. There are limitations in situations in which there are few other assets available to the couple signing the Agreement as a divorce court has to be satisfied that the needs of the couple can be met without recourse to the gifted asset.
In general however, Pre and Post Nuptials can offer a large degree of reassurance to the older generation when deciding to transfer assets through the family. In our experience most adult children will readily sign such a document if they are receiving a family asset in return.