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Are you thinking of gifting your child and their partner a contribution towards their deposit?

Published on 28 September 2016 | Modified on 15 December 2022

Written by Stacey Bennett

It is not uncommon for parents to gift their children part or whole of their house deposit to help them onto the buy a residential property and move on to the property ladder. Naturally then, they will want to hold a beneficial interest in the property and protect their contribution from their child’s partner, especially as there is no certainty that they will stay together.

If you have considered, or have already decided that you are going to help your child and their partner with a house deposit, you need to make sure that, in the event that something goes wrong, you have taken the necessary steps to protect your interest in the property. A hassle-free way to do this would be to create a declaration of trust between your child, their partner and yourself.

An example scenario would be:

  • Your daughter and her partner want to purchase a house for £350,000
  • You gift them £50,000 as a deposit
  • 3 years down the line they unfortunately separate

What happens to your £50,000?

If you had no declaration of trust in place, you would simply have no automatic right to your money and neither would your daughter. In most situations the proceeds of sale are simply split 50/50 between the couple. This would result in you losing thousands of pounds. By putting a declaration of trust in place you are safeguarding your financial interest in the property and ensuring that, should anything happen, you get your money back.

For example, in relation to the sale proceeds of the property, the declaration of trust would stipulate that:

  • The mortgage is redeemed in full
  • Partner will receive their share of the remaining proceeds
  • The daughter will receive her share of the remaining proceeds
  • Parents will receive £50,000

What if they’re married and get divorced?

If the couple marry and get divorced then circumstances could change and it would be left to the divorce courts to decide how the money is split. However, having a declaration of trust in place would be an advantage in this situation, as it would be used in the courts as a persuasive argument.

If you feel that you need to protect your interests and want that added peace of mind, then call Poole Alcock today at any of our Cheshire based offices. Our team of friendly specialist solicitors are happy to help.

As the old saying goes, it’s better to be safe than sorry!

For further information, please get in touch using our contact form for a consultation.

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