Giving your married child a down payment, then divorce

[Anonymous]

Anonymous wrote:OP, I understand your concern but trying to maximize advantage to a sad, and hopefully unlikely outcome is soul sucking. It leads down an ugly path. Don't be that person. The person spreading bad karma, otherwise your DD and spouse should be keeping you at arm's length. Don't gift more than you're comfortable. You could always gift to your DD in yearly increments, and she could then choose, or not, to pay down the mortgage.

Unlikely?

In 2018, per 1,000 women, 16.6 get married annually and 7.7 get divorced annnually.

That is a 46% divorce rate. 7.7 divided by 16.6

Source: https://www.census.gov/library/visualizations/interactive/marriage-divorce-rates-by-state.html

[Anonymous]

Anonymous wrote:If you have given or plan to give a down payment to your child(ren) who are already married, how do you protect your gift from being taken by the spouse if they get divorced in the future? The house becomes a community property from my understanding.

Do you structure the gift as an interest-free loan that is due upon divorce?
Do you make them sign a post-nup?

We are located in DC, if that makes a difference regarding laws.

You’re a spiteful cheapskate loser op

[Anonymous]

You give it to them or him as a zero interest loan for a set number of years. But please understand, no matter how you do this you will damage the relationship. If you want the money secure, leave a trust with dispersion limits or offer to set up 529s for their kids/future kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you have given or plan to give a down payment to your child(ren) who are already married, how do you protect your gift from being taken by the spouse if they get divorced in the future? The house becomes a community property from my understanding.

Do you structure the gift as an interest-free loan that is due upon divorce?
Do you make them sign a post-nup?

We are located in DC, if that makes a difference regarding laws.

You’re a spiteful cheapskate loser op

So your advice is to give $500k and accept the risk of $250k leaving the family in the common occurance of a divorce? That’s not being a cheapskate right?

[Anonymous]

Anonymous wrote:You give it to them or him as a zero interest loan for a set number of years. But please understand, no matter how you do this you will damage the relationship. If you want the money secure, leave a trust with dispersion limits or offer to set up 529s for their kids/future kids.

I think this is the best option. Loan and alsoput the principal in a trust.

[Anonymous]

I have a family member living through this right now. Unless it was in the prenump or given before marriage it is community property. My sister never thought she would get a divorce and always thought she would get the money as part of her inheritance. Well now the house is being sold and the profit will be split 50/50.

[Anonymous]

Anonymous wrote:I have a family member living through this right now. Unless it was in the prenump or given before marriage it is community property. My sister never thought she would get a divorce and always thought she would get the money as part of her inheritance. Well now the house is being sold and the profit will be split 50/50.

I should add in that our parents have passed away and per my father's will that WAS her inheritance so we all split the estate (except her) which came to about what her down payment was -- she got about 50k more. She was all fine with it when the estate was first being settled and the marriage was good and it looked like she was getting more than the rest of us. Now it isn't looking good so we will all have to help her out.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have given or plan to give a down payment to your child(ren) who are already married, how do you protect your gift from being taken by the spouse if they get divorced in the future? The house becomes a community property from my understanding.

Do you structure the gift as an interest-free loan that is due upon divorce?
Do you make them sign a post-nup?

We are located in DC, if that makes a difference regarding laws.

You’re a spiteful cheapskate loser op

So your advice is to give $500k and accept the risk of $250k leaving the family in the common occurance of a divorce? That’s not being a cheapskate right?

You could lose even more, if they can't sell the property for what they paid for it. Or worse, if the spouse wants to buy your child out. It won't be considered your child's portion or anything.

[Anonymous]

OP, you sound awful. Keep your money, and your distance.

[Anonymous]

I’m a divorce lawyer. You’re very smart to consider this. Under DC law, property acquired during the marriage by a gift to one party remains that party’s separate property so long as she can trace it out. That means you can’t say things like, “This is for both of you.” You make it clear it is a gift to just your child. Your kid then doesn’t do anything to make it a gift to the marriage (ex. by writing a note “I know you’re uncomfortable with the fact that my parents gave US the down payment but this house is OURS). Keep good records bc if you die, you’re not around to say what your intentions was with the gift.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you are giving them 20%, then put your name on the title

OP here. Please Walk me through how this is treated if three adults are on the title.

My mil did something similar with her daughter. She still owns 20% of her home.
Interestingly their son helped them buy a home by putting down a %
When it came time to sell he got his % back.
They sold their retirement home to move into a smaller senior community.

It worked out for them.
I would assume that in your case the divorce would mean that 80% of the house is communal property.
Do you have other children? You would most likely want to specify who gets your portion of the house

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's a gift. What they do with it once it's given is none of your business.

If you aren't comfortable letting it be a gift, don't give it. Don't attach strings to gifts.

I’m sure they would both want this financial gift/assistance. They wouldn’t be able to afford a house otherwise (where they want to live).

Is it a good idea to buy a house that you couldn’t afford without a large gift?

[Anonymous]

Intra-family loan rates right now are super low - less than half a percent. Make an intra-family loan, document it, and forgive the interest every year.

[Anonymous]

Be careful with loans- it’s easy to get into bank fraud this way.

Wasn’t this a big theme in The Wire?

https://davidsimon.com/kwame-brown-another-federal-case-another-head-shot/

[Anonymous]

The gift should be given in the spirit of optimism, as a sign that you are thinking of them as one moving forward.

I am sorry that life has made you so cynical to want to be able to pull the gift back from one of the recipients of you deem them unworthy years from now.

Very gauche and cold way to think about your own family (which is what you probably claim the new person is becoming).