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08/04/2016

The Granny Annex or Beware the Intervener

The thought of living close to children and grandchildren is one which many older parents find appealing and for many it becomes a reality.  This may involve moving to the same town as the son or daughter or even moving to live in the same household as the family.

The concept of the granny annexe has been in existence for many years and can be mutually beneficial.  Suddenly there is a live in babysitter and the worry of older parents living alone is removed.  For the parent, they have the comfort of knowing that family is on hand should they become ill and added to this is the pleasure of daily contact with grandchildren.

The granny annex is often funded by the parent.  It is not uncommon for them to pay for an extension to the house or to assist in the purchase of a larger property than would ordinarily have been bought so that they have their own living accommodation within it.  Thereafter they often assist with on-going financial contributions to the household.  All round it is, on the face of it, a beneficial arrangement for all.  Or is it?  The answer is generally ‘yes’, until the marriage of the son or daughter breaks down.  What then happens to the elderly parent?

Too often we have seen awful situations arise as relations can rapidly deteriorate.  The spouse who is the child may move out of the matrimonial home leaving the grandparent residing with their estranged son or daughter in law.  This can lead to strained relations and in one case a disgruntled daughter-in-law restricted the electricity supply to the granny annex.  It is also not uncommon for contact with the grandchildren to be limited as family relationships fall apart.

As well as these practical and emotional issues there can be some very serious financial concerns.  The matrimonial home may have to be sold in order to meet the accommodation needs of the parties and their own children.  Where does this leave the occupant of the granny annex?  It can be hard enough to make two households out of one, let alone three.  The parent has often used their savings, including the proceeds from the sale of their former property to contribute towards the extension or the purchase price of the house.  They can be left with very little in terms of capital, assuming that their housing needs are met for the rest of their lives.

The financial contribution of the elderly parent may not be acknowledged by one party in the divorce or the extent of the financial contribution may be minimised.  It is all too common for one party in the divorce to argue that money was given as a gift.  There are also arguments about who has the greater needs and the priority of the parties.  The elderly parent is then in the unenviable position of having to fight for their own needs to be taken account of, and for their contribution to be acknowledged or repaid.  This can result in the parent having to become an intervener in their son or daughter's divorce proceedings so that their own future needs can be considered.

This situation could have been avoided with careful planning at the time the property was purchased or when funds were made available by the parent.  Difficulties of this nature should be anticipated and the parent making the financial contribution should be encouraged to take independent legal advice.  Their position can be protected if they go on the title to the property with shares of ownership clearly defined.  Alternatively, a Declaration of Trust can be drawn up or a loan agreement entered into.  The parties might also want to consider a Living Together Agreement to regulate the situation and to clearly set out what will happen in the event of future disagreements.  All of these mechanisms provide clarity, they confirm the understanding of all parties at the time and this in turn makes it easier for the family court when asked to consider issues arising from the breakdown of a marriage.

If someone has to become an intervener in divorce proceedings, there are of course legal costs to be met and these can be significant.  There is also the emotional cost of being involved in court proceedings and being part of a dispute with family members.  All too often people take the approach that because they are part of the same family all will be well and people will do the right thing.  The problem is that at times of stress, upset and difficulty people's view of what is right alters.  An anonymous quote sums this situation up quite nicely, 'they say blood is thicker than water...but it's also a lot harder to clean up when it spills'.  Don’t leave financial arrangements to goodwill, make sure that they are carefully documented so that there is clarity.

For further information please contact Justine Flack on 0116 2473564 or by email to justine.flack@howespercival.com.