A Declaration of Trust, also known as a Deed of Trust, is a legal document which lays out the terms upon which an asset is held on trust and includes all the financial arrangements of all those who have an interest.
read moreThey are used in family law for cohabiting couples who purchase a property together but do not have a cohabitation agreement. The document will explain the investment made by each party in the property, for example if one person pays the full deposit and the other pays for renovation costs.
It is a protective measure, used to minimise risk of dispute should the property be sold, rented out or a relationship end.
These documents are tailored to the asset purchased, and the investors in the asset.
They usually include:
A cohabitation agreement is a comprehensive document that covers a range of aspects of a couple’s life together, including all financial assets as well as arrangements for children and even what happens to the family pet if the couple separates.
read moreCohabitation agreements are not legally binding, but they will be recognised by the court and have a decisive weight if prepared in the right way, therefore they are often used in a court dispute over property.
It is important to remember that the law will protect children in the case of relationship breakdown and makes no distinction between married and unmarried couples when deciding child arrangements.
Declarations of Trust are less comprehensive than cohabitation agreements as they usually focus on property specifically. However, unlike cohabitation agreements, they are legally binding on the owners of the property when properly prepared by a family lawyer and signed by the parties. This means that the signatories are bound to the terms of the agreement and breaking them could result in legal sanctions.
It is a good idea to have a Cohabitation agreement prepared recording your agreements to ensure that terms of your agreement are recorded and that in the event of a relationship breakdown, you know what would happen to your assets. Whilst the Cohabitation agreement covers a wider range of matters than those included within a Declaration of Trust, it is important that a Declaration of Trust is prepared in addition to ensure that details around your ownership can be enforced in a legally binding way. Many couples opt to have both documents prepared and have the Declaration of Trust annexed to the Cohabitation agreement for completeness.
If you are unsure as to your specific needs, speak to an expert family lawyer.
Declarations of Trust can be varied if all the involved parties agree to the change.
read moreYou may need to amend the agreement if there are changes in your circumstances, for example the property needs to be remortgaged. If there are other significant life events, such as the birth of a child, we strongly advise that you seek legal advice and ask your lawyer to amend the agreement to ensure that it is done in the right way, and that it remains legally binding.
Please note that if the property is subject to an existing mortgage, you may need to obtain the mortgage lender’s consent before a Declaration of Trust is created or varied.
In the event of a disagreement around terms or variation of a Declaration of Trust, you may need dispute resolution, or the court can be asked to intervene
You can certainly have a Declaration of Trust prepared if you are married, and it may work in tandem with any pre or post-nuptial agreement you have with your spouse.
However, you do not have to have one. It is a personal choice. If you require assistance in this decision, please seek legal advice.
For married couples, you can have a Declaration of Trust prepared, however it is important to remember that the court has wide discretion in distributing assets in the event of a relationship breakdown under the Matrimonial Causes Act 1973, therefore despite the agreement being legally binding, it may not be upheld. A Declaration of Trust can be a helpful indicator of the parties’ intentions, however the court has a duty to prioritise meeting the parties’ and, any children of the family’s, needs
If you wish to ensure that your intentions around property ownership are considered by the court in the event of a divorce, you may wish to have a Pre or Post Nuptial Agreement prepared at the same time as the Declaration of Trust.
Sign up for advice on divorce and relationships from our lawyers, divorce coaches and relationship experts.
Privacy Policy