Lockdown divorce threat spurs parents to safeguard family wealth
Nearly three-quarters (73 per cent) of adults believe that the Covid-19 extended lockdown will trigger a rise in divorce rates across the country, according to a new study by Handelsbanken Wealth Management.
Rising concerns over marital health is having a significant impact on estate planning; over two thirds (67 per cent) of parents have decided to delay family inheritance planning, for fear that their children’s marriages will end in divorce, with the likelihood of wealth and assets leaving the family estate.
In fact, a quarter (27 per cent) of parents have little or no confidence about the prospects of their children’s marriages lasting a lifetime and one in six (16 per cent) have doubts about their in-law’s financial competence. The findings show that these worries are not unsubstantiated, with more than one in four parents (27 per cent) having children who are separated or divorced.
To mitigate substantial wealth leaving the family in the event of divorce, a fifth of parents (21 per cent) are gifting small amounts to their children to help with day to day living, while 19 per cent are gifting directly to their grandchildren.
Parents have other reasons for restricting levels of financial support; 13 per cent of parents say it will reduce their children’s incentive to work, and 12 per cent think there would be little left for their grandchildren.
Christine Ross, Head of Private Office (North) & Client Director at Handelsbanken Wealth Management, says: “The emotional and financial pressures of an enforced lockdown have tested many marriages and sadly for some it will be the final straw. It is not unusual for parents to disapprove of their children’s choice of partner, but they can be equally reluctant to interfere in case they cause a family rift.
“Parents who are pessimistic about their children’s marriages are approaching us for advice on how to prevent assets from leaving the family for good. This often results in parents favouring small financial gifts over lump sums, and in some cases setting up discretionary trusts. In times like these, it’s important for advice to be sought, especially when it concerns safeguarding the financial well-being of different individuals within a family.”