Working in family law, we are aware there is a lot of jargon involved which people find hard to understand. One of the questions we are asked regularly is what is the difference between a cohabitation agreement and a declaration of trust
Declaration of trust
A declaration of trust (also known as a deed of trust) is a legal document setting out who owns a property and the shares in which they are entitled to receive the profit (sale proceeds) or income from the property.
It explains who the legal owners are (the people named in the title documents at the land registry) and who the beneficial owners are (the people entitled to the profit or income from the property). In most cases, the legal and beneficial owners are the same people, but this is not always the case. Beneficial ownership can be held as joint tenants or tenants in common in equal or unequal shares.
In contrast a cohabitation agreement will not only include a declaration of trust, but it can include a much wider range of financial arrangements between a cohabiting couple, providing for how their finances will be organised both during their cohabitation or in the event of separation.
Examples of financial arrangements you can include in a cohabitation agreement include:
- What property will remain your separate property and what property is or will become joint property?
- How will gifts made between you be treated or gifts you receive from others?
- How will inheritances or unexpected good fortune be treated?
- Will you open a joint household account or any other joint bank or building society accounts, and if so, how will they be operated?
- What arrangements will you make for any current or future debts?
- How will you deal with the payment of household expenses?
- What arrangements do you want to put in place in the event of a sale?
- Do you want to put in place any financial support for one another during your cohabitation or in the event of it ending?
- Do you want to put in place any financial support for children during your cohabitation or in the event of it ending?
- Do you want to put in place any arrangement for pets during your cohabitation or in the event of it ending?
- Do you want to put in place arrangements in the event of death and nominations for pension and death in service benefits or life insurance?
- What arrangements do you want to put in place to review your agreement?
- What arrangements do you want to put in place if there are replacement or additional homes?
- What events will bring the agreement to an end?
Cohabitation agreements offer financial protection and certainty and avoid potential claims against property and costly litigation. They can also provide financial security by providing for financial provision in a way that would not be required by law, and in the event of a separation help reduce stress and anxiety.
Watson Morris on cohabitation agreements and declarations of trust
The team at Watson Morris Family Law are experts in all matters relating to declarations of trust cohabitation agreements and cohabitation breakdown.
Contact us today for more information.
Written by Caroline Watson
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