In the second in our stages of life mini series, we look at: prenuptial agreements or other asset protection; reviewing wills; life insurance; the legal side of buying a family home; guardianship issues and financial structures that assist with school and university fees.

In the second in our stages of life mini series, we look at: prenuptial agreements or other asset protection; reviewing wills; life insurance; the legal side of buying a family home; guardianship issues and financial structures that assist with school and university fees.

Moving to the Country
In the example for this article, Claire and David are getting married. Having never lived together before, each has their own property. They decide to sell Claire’s flat and keep David’s house to rent out. They see an old country cottage in an idyllic rural location that they want to buy.

Property Considerations
As David’s flat is mortgaged, his solicitor needs to get the lender’s consent to it being rented out. Both David and the lender need to be sure that the tenant can be made to leave the property at the end of the tenancy, or earlier if there is a breach of the tenancy agreement. An assured shorthold tenancy agreement with a security deposit can provide for these eventualities and David will be advised about how to comply with the new Tenancy Deposit Scheme.

Claire and David should consider what type of joint ownership is most suitable for the purchase of their country cottage and whether a declaration of trust should be put in place. Most married couples tend to prefer to own as joint tenants, but all avenues should be investigated.

The cottage is located at the end of a long track, which is not a public highway. Checks need to be made as to who owns the track, who else has the right to use it, who has responsibility for fixing it and whether the owners of the cottage actually have a right to use the track.

This is particularly important if the property is close to a village green or a common, as sometimes these tracks are restricted to pedestrians only. Not only would this make life tricky in a practical sense, but the value of the property might be much less than first thought.

Family Considerations
As divorce becomes more expensive and more uncertain, an increasing number of couples think about entering into a premarital agreement to set out their pre-marriage financial positions and make some provision in case they split up.

Currently such agreements are not binding on the courts, but they tend to be given great weight if they are fair in all the circumstances and each party has been honest about their own circumstances.

The agreement might record that Claire’s capital contribution to the purchase price of the cottage was greater than David’s, but David’s flat will generate rental income and therefore he may pay more towards the mortgage.

A pre-marital agreement would mean that financial issues such as these are looked at and – as far as possible – resolved long before acrimony and broken dreams start clouding the sky in the event of a divorce.

Specialist family law practitioners could take Claire and David through the process of making an agreement either traditionally, by correspondence with each other’s representatives, or collaboratively in a series of meetings aimed at reaching a mutually acceptable solution.

Tax Considerations
Claire and David are young and their assets are not yet significant, but marriage is a trigger to put in place new wills as any existing wills are automatically revoked by a wedding. The sale of Claire’s flat should not give rise to any capital gains tax liability as she has only ever used the flat as her main residence. David has three years in which to sell the flat after he has stopped living there before capital gains tax comes into play, even if he rents it out during that time.