Island Life Magazine Ltd October/November 2008 | Page 20

life

PROPERTY

DOES ‘trust’ NEED TO
BE FORMALISED?
Contact: Mark or Terence Willey

It is not uncommon for
children to look to their
parents for financial assistance
to acquire their first property,
particularly in difficult
economic times as now beset us
all. Quite apart from the legal
costs of the purchase, which
incidentally have generally not
risen in line with inflation over
the years, the disbursement
costs of Stamp Duty, Land
Registry and Search fees have
all substantially risen.
Very often monies provided
by parents are upon an
understanding with their
children that they are to be
repaid sometime in the future
under certain circumstances or
upon the sale of the property.
It is essential therefore that a
formal Trust Deed is entered
into by all the parties relating
to the transaction.
A Trust Deed is in fact a
contract and often remains off
the formal Title to the Register
of the property, and is an
enforceable document and at
least safeguards circumstances
such as domestic dispute that
may occur in a marriage, civil
partnership, divorce or simply
separation of partners. In the
absence of a Trust Deed setting
out the full circumstances of

financial contributions and
conditions attached to such, it
can often prove complicated,
costly and difficult in arguing
a position to the Court as
to establishing the original
intentions and agreement
of the parties. Occupational
arrangements and financial
contributions to properties by
third parties should likewise
be protected by a formal Trust
Deed.
All to often in the past
I have experienced many
situations where financial and
other arrangements between
members of the family are not
properly formalised and were
therefore not protected in the
event of legal challenge to such
arrangements.
Trust arrangements can
also be brought on to the
Title Register to a property
in various forms by the
completion of what is known
as An Equitable Trust
formalised by Deed or the
creation of a private mortgage
and registered as a ‘Charge’
against the property. It may
be necessary to first seek
consent of a Bank or Building
Society before securing
such a registration, which
cannot always be assumed as

forthcoming. However the
completion of a Deed, whether
registered or not, remains the
critical safeguard.
I have also known many
circumstances where children
have been able to financially
assist their parents purchase
their property from the
Council as sitting tenants
under a right to buy scheme.
Again this should be
formalised by a Trust Deed
and signed by all the parties to
protect the monies provided by
the children and the terms for
repayment to them.
Should either of the parents
be taken into residential care
in the future, it is equally
important to establish the
equitable entitlement in the
property belonging to the
children. All of this can be
established in a Trust Deed.
If due and careful
consideration is given at the
outset to the completion of
a Trust Deed by the parties
concerned, who incidentally
usually share the costs for
preparation and completion of
the same, then the “grounds
for uncertainty” can be
considered as substantially
cleared.

Terence Willey & Co
Tel: [phone]
www.terencewilley.co.uk
20

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