Divorce fear means inheritance passed up
Recent research has indicated that nearly a third of parents are not willing to offer an inheritance or financial aid to their married offspring due to the fear of divorce.
30% of adults were unwilling to pass on money to their children due to the risk of money leaving the family through divorce, according to the Investec Investment and Wealth report.
According to the 1,000 parents surveyed, 12% of their children had parted from their spouse and an additional 14% stated that they had little or no confidence that their children’s marriage would last “a lifetime”.
As well as being afraid of the results following divorce, those who responded stated that their confidence was “limited” in the financial affair management abilities of their child’s spouse.
A fifth felt that their children would waste an inheritance on extravagances which were unnecessary, such as expensive holidays and 14% believed that the financial aid would lessen the incentive for their children to “work hard and earn their own money”.
In terms of money being left over, 13% thought that giving too much to children would mean there would be to little left for grandchildren and further generations.
As a means of safeguarding against these risks, the findings indicated that a sixth of parents preferred to provide smaller financial gifts to aid day-to-day living, as opposed to larger lump sums.
14% chose to skip a generation and instead bequeath assets to grandchildren.
One in seven stated that they were considering a discretionary trust, something which could be a “useful means to protect family wealth from future divorce within a family” according to Investec.
Commenting on the reluctance of parents to interfere, despite their disapproval in their children’s spousal choice, was Simon Bashorun. The financial planning team leader at Investec stated:
“..with divorce rates as they are in the UK, we are seeing increasing numbers of parents looking to protect wealth from leaving the immediate family, particularly if they’re pessimistic about the state of their children’s marriages.
“This often results in parents favouring small financial gifts over lump sums and in some cases setting up discretionary trusts.”