Buying with Someone Else

Buying with Someone ElseIf you are buying a property with friends, a partner, relatives or business partners and are contributing different amounts to the price, deposit, fees or mortgage payments, you should consider a Declaration of Trust.

What is a Declaration of Trust?

A Declaration of Trust is a legally binding written agreement which records the financial arrangement between those who jointly own a property.

When may I need a Declaration of Trust?

If you are contributing a large share of the deposit/price – it will protect your financial contribution in the event that the property is sold

If you are making contributions towards the mortgage - it will set out how the contributions are to be made and how you wish the mortgage to be repaid if you wish to sell

If you are contributing towards the purchase expenses, such as stamp duty land tax and legal fees – it will set out what you have paid and how it is to be repaid if the property is sold

When should a Declaration of Trust be done? It should be done at a time when the owners of the property and other persons who may have contributed towards it are in agreement. This would usually be when a property is purchased by or transferred to the owners.

What are the benefits of a Declaration of Trust?

- Avoids prolonged legal disputes over finances if there is a disagreement between the owners

- Sets out what is to happen if and when the property is sold

- States how the proceeds of sale should be divided between the owners

For helpful and friendly legal advice please contact Trudie Nicholas or Heather Razvi on 01432 352121 who will be able to assist.

Gifting the Family Home

Gifting the Family HomeIf you are thinking of making an outright gift of your home during your lifetime, be cautious!

Why make an outright gift of your family home?

There are many reasons for considering making an outright gift of the family home such as:

  1. General affection – your recognition of the recipient’s love and affection
  2. Moral obligations - you feel that it is appropriate that a family member receives a gift of value from you
  3. Financial obligations – your recognition of the recipient’s financial contribution
  4. Family harmony – avoiding family issues or disputes
  5. Passing of the burden of owning property – to free you of the financial burden and responsibility that comes with owning a home

But you should consider such a decision with caution as your home may be your most valuable asset.

Some of the reasons for being cautious about making an outright gift of the family home

  1. Financial difficulties of the recipient  - if the recipient has financial problems or becomes bankrupt, your home may be lost to creditors
  2. Divorce of the recipient – if the recipient gets divorced, your home will become part of his/her assets in determining a divorce settlement
  3. False hopes about tax – Beware you may not save inheritance tax or other taxes
  4. Recipient in receipt of means-tested benefits – such benefits may be stopped or reduced
  5. Long-term care provision – it may not reduce the cost of long-term care fees
  6. Premature death of the recipient – if a child dies, the family home will pass by their Will or the ‘rules of intestacy’ which could be to a spouse who may then remarry.

Still wish to gift your family home? Please contact Amy Makaruk or Trudie Nicholas on 01432 352121 who will be able to assist