Living together – can a Declaration of Trust be changed if we split up?

A Declaration of Trust is a legally binding document which unmarried couples who live together can use to accurately record how they share ownership of a property.

We see many disputes which involve couples who didn’t do this, who never set out at the time the property was purchased how it should be divided up if the relationship breaks down later or if one person dies.

But we also know that for some couples who did enter into a Declaration of Trust, but on separation no longer feel it reflects what one or both want, a Separation Agreement can often help redress the balance.

• Our highly experienced, specialist Cohabitation Team can provide all the advice you need, whatever stage of your relationship you’re at.

What are the benefits of a declaration of trust?

Particularly useful when a couple purchase a property with unequal contributions, a Declaration of Trust can outline this along with details of who has paid what towards the mortgage, bills and home improvements for instance.

It can also cover things like how equity is to be split if the property is sold in the future.

In legal parlance, it’s a document in which the legal owner(s) of the property declare that they hold the property on trust for specified beneficiaries.

This is an example of how it works:

• A and B are an unmarried couple who have bought a property. A put £40,000 towards the purchase price. B put £20,000 towards the purchase price. The remaining funds are provided by a mortgage. A and B wish to declare their contributions by percentage. They declare that A’s interest in the property constitutes 80% and B’s interest constitutes 20%.

A declaration makes it clear at the outset, what the couple intended at the time of the purchase.

Can a declaration of trust be changed if we split up?

What if A and B separate and B decides she wants a bigger share and that 20% is not fair, as they manage finances jointly?

A Declaration of Trust is legally binding, if executed properly, and the Courts have described them as amounting to “conclusive” evidence of the beneficial shares.

A Court is extremely unlikely to depart from what is in the Declaration unless a party seeks to set it aside on the basis of one of the following three limited grounds:

• Undue Influence: If one cohabiting partner uses improper influence over the other, this ground could apply. For example, if it could be proved that someone was forced to sign the Declaration against their will, the Court might set aside the Declaration.
• Mistake: If the person preparing the Declaration, wrongly records the shares in which the property is owned and those signing it don’t realise this error and proceed, the Declaration could be overturned.
• Fraud: if a party alleges their signature has been forged, and they can prove this, the Declaration may be set aside

For all three grounds, the burden of proof is on the Claimant.

Unfortunately, in A & B’s case, the Court would almost certainly stand by the original Declaration of the 80/20 split as this is what the parties intended at the time of the purchase.

A Court will not set aside a Declaration just because one party later decides it is unfair. B’s case does not fall within one of the three grounds above for setting aside a Declaration.

If A were to agree with B that B could have a share representing 50%, we would recommend documenting this in a Separation Agreement, as the agreement is now different to their original intentions.

How can a Separation Agreement help when a Declaration of Trust no longer reflects what is wanted?

A Separation Agreement is a document which can set out what is to happen in relation to your assets, in as much or as little detail as you like. It can cover property, bank accounts, debts and even pets!

In the scenario above, if A decided to allow B to have a 50% share in the property, this can be recorded in the separation agreement which will help to ensure that A does not change their mind. B will be in a better position financially as a result of the Agreement so recording it in writing is always a sensible idea.

Get in touch

Wards Solicitors is recommended in the independent Legal 500 guide for 2024 for its outstanding professional service standards and high levels of expertise amongst its lawyers.

Solicitors Rebecca Max and Chloe King specialise in, Separation Agreements and the division of assets after a cohabiting relationship ends.

Please contact Rebecca or Chloe to arrange a free, no obligation, 30-minute initial appointment.

• Email: rebecca.max@wards.uk.com Phone: 01454 204880
• Email: chloe.king@wards.uk.com Phone: 0117 929 2811