A couple are looking into purchasing their first property together. One of them already has a nest egg ready to put into getting on to the housing ladder… and the other? Well, he or she has tried to scrimp and save but just can’t resist the lure of decent wines/holidays/nice clothes/Xbox credits. You get my point. Buying a house together might seem like the perfect way to cement a loving relationship but it is undoubtedly a financial risk if, like many relationships, the financial elements of the union are anything but equal. In this scenario, it can be wise to look at having trust deeds drawn up.
Although not the most romantic concept, a trust deed can protect both parties when looking to purchase property. Commonly referred to as a ‘declaration of trust and cohabitation’ or ‘co-ownership agreement’, a trust deed is a legal agreement between two joint owners which can specify the amount of capital each party contributed to the purchase, the agreed shares of ownership and exactly what should happen if one of the parties dies. A depressing thought. However, assuming you have years of cohabitation ahead of you, a trust deed can also provide legal protection if one of the owners leaves the home or starts a dispute over such things as building extra rooms or adding a conservatory. Basically, a trust deed can cover any potential outcome and could prove invaluable in the event of changing circumstances.
If, like our couple, one of you has invested more money into climbing onto the housing ladder, you might each agree that it is fairer to have this reflected in your share of the property. Let’s say you put in 80% of the funds needed and your other half managed to scrimp together the remainder. Surely you would want this reflected in bricks and mortar? A trust deed will ensure this happens by apportioning your interest in the property accordingly meaning that, if you ever went your separate ways and the house had to be sold, you would get your fair share back.
Of course, you and your partner may well live together forever in harmony. However, it makes sound financial sense to consider distinctly unromantic elements before buying a house with a loved one. As anyone who has been burned by a greedy ex will tell you, a trust deed can ultimately negate a great deal of heartache.