Did Your Parents Ever Help You Out?

If your parents helped you to purchase Real Estate when you got married, watch out, because in case of a divorce (yours), your folks may sue you for that "gift" they gave you.

Many parents do help their kids to purchase the dream house they want to buy when they first get married. In general the property will be bought in both sides’ name: The bride and the groom in equal shares. But things can get nasty too!

The law suit:

What happens if you divorce and your parents ask to be paid back for that same amount they have invested in your Real Estate?

This was the case judged in the Nazareth Family Court by the honorable Judge Mr. Sary Joice in November 2011.

The parents (the plaintiffs) sued their son and ex-daughter-in-law (the defendants) for a third of the house the defendants had purchased after getting married. The property was assigned in both the son and daughter-in-law`s names in equal shares.

The plaintiffs also asked the court to be granted a total of 210,000 shekels as compensation for having taken care of their grandchildren for seven consecutive years. In addition, they sued for 189,000 shekels as "extra general compensation".

The Facts:

The defendants married in 1985. From this marriage they had three children. The couple separated in 2006 and eventually divorced.

In 1994, the plaintiffs decided to move near the defendant in order to "help them out" raising and taking care of the grandchildren. After the third child was born, the defendants sold their apartment in order to buy a bigger and better one. In the meantime they moved into the plaintiff`s apartment.

The plaintiffs wanted to help their son`s family, therefore they all agreed on selling the plaintiff`s apartment and to buying a bigger and more suitable unit, where they would move in together. The plaintiffs would have their own unit in the apartment.

The relations between them slowly deteriorated and reached a point where the plaintiffs had to move out in 2004, claiming they could not take their daughter-in-law`s bad behavior towards them.

The house was eventually sold after the legal proceedings had begun and the money for the sold apartment was deposited with the lawyers until an agreement regarding the division of the sum was reached or a decision was given by the court.

There is no doubt that the relationship between the plaintiffs and their son was a very "intense, close and protective one". The son (the defendant) had a “high respect and appreciation” for his parents.

As expected, during the proceedings, the son (one of the defendants) agreed to the plaintiff`s claims but the other defendant (ex-daughter-in-law) of course denied all of them, claiming that the money was given to them as a gift out of good faith of the plaintiffs and they never spoke of anything else but as a final and sincere gift!

The total amount given by the plaintiffs was $104,000 but out of this amount, $ 14,000 was used to build a separate unit for the parents in the new apartment and $ 90,000 as a down payment for the apartment.

The Honorable Judge decided partially in favor of the plaintiffs granting them 29% of the rights on the Real Estate (equal to $ 90,000) but not for any compensation whatsoever.

A word of wisdom:

We all love and care for our children and as grandparents we all develop a special relationship with them. We want to help them out and we do care about them.

The problem often seen in family court involving relations between parents-in-law and sons is very much the same and ends up becoming ugly. Unfortunately we also frequently see families divided where grandparents end up with limited access to their grandchildren.

It is important to plan in advance. It is not a crime to purchase real estate or financially help with the purchase, giving the rights to the property in accordance to how much each side had initially invested.

An example of a future model:

A and B recently married and want to purchase their dream house but only A can provide a substantial amount of the down payment. Let`s assume the house will cost $400,000 where A will bring in (from his/her savings or as a gift from the parents) $200,000. In this case they will be advised to have an agreement concerning both sides’ rights in case of a separation or having the house assigned with authorities not in equal parts.

In this example the house will be divided as follows: 50% to A and 50% as a mutual asset. In case of divorce, the house will be divided only for that 50% meaning that A will receive a total of 75% equal to $300,000 and therefore A will not "lose" his initial investment on the property.

There are many cases where we as parents know from the very beginning it would be “wise to have this kind of security" and because we are giving the "gift" we can also make some "demands" on how to give it!

Sincerely,
 

Tzvi Szajnbrum, Attorney at Law