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Divorce Courts in Germany have ordered a husband to repay a gift of £25,000 to his in-laws. The Federal Court of Justice decision leaves the door open for in-laws to reclaim presents given to their child's spouse in a decision that could have far reaching consequences.
The money had been paid by the wife's parents to help their daughter set up home with her new husband. The Court ruled that there was a contractual basis to the payment, since in return the in-laws could expect to enjoy the fruits of the gift. That expectation was removed when the divorce occurred.
In their ruling the judges said "If the child benefits from the gift for a long period of time (for example if the couple lives together in a house donated by the in-laws), then only a part of the gift must be paid back. If the parents want to avoid this and make sure that only their own child benefits from the gift, then they should offer it only to that child."
Andrew Barton, a Family solicitor at Stephens Scown commented "In English law, once a gift is made by a parent or other third party it is assumed to fall within the general assets of the couple. This means that it would be shared between them on divorce in the same way as their other assets are.
"If this is not the intention at the time the gift is made it is important that this is recorded and, if possible, agreed between all parties. If there is some record of this intention -a letter for example - it can carry significant weight in any divorce that follows.
"A more formal means of preserving any gift would be to enter into a prenuptial or post-nuptial agreement. Whilst not legally binding, such agreements carry significant weight, especially if specific reference is made in the agreement to the gift and the mutual wish of the parties to return it to the parents on any divorce."
Andrew is an Associate Solicitor in the Stephens Scown family law team, which is top ranked in the independent Chambers and Legal 500 guides to the legal profession. Andrew is a Resolution Accredited Specialist in complicated financial matters arising from divorce and has particular experience in dealing with international divorce issues.
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