We often have clients who come to us believing that the Declaration of Trust they entered into prior to getting married, will determine how their finances are resolved on divorce. That, however, is not the reality of the legal position.
What is a Declaration of Trust?
A declaration of Trust is a legal document confirming the terms on which an asset, such as a property, is held on trust. It may reflect, for example, that one party has made a greater contribution to the purchase of that asset. If that asset is sold, the proceeds of sale are then usually divided in accordance with the terms of the Declaration of Trust, and can for example, provide for an unequal division.
What is the impact of marriage on a Declaration of Trust?
Getting married does not alter the terms of an existing Declaration of Trust. However, by getting married you have entered into a binding contract under the Matrimonial Causes Act 1973. This provides spouses and civil partners with an array of legal protections.
Therefore, whilst the Declaration of Trust may still be considered valid, the family court does not have to be bound by its terms when distributing assets on divorce. The family court will look at all of the circumstances of your particular case, and whilst the Declaration of Trust may still be one of the factors considered, the weight attached to it is likely to be significantly weakened. This is particularly relevant if the property subject to the Declaration of Trust is the family home, which is considered central to the marriage. The starting point for division of the family home will often be 50/50, even if the Declaration of Trust provides for something different.
What can I do if I have a Declaration of Trust and I am intending to get married?
If you currently have a Declaration of Trust in place, and are intending to get married, you should obtain legal advice as to how to protect your assets in the event of a future divorce. Whilst understanding how your marital status affects formal documents, such as a Declaration of Trust, might not be at the top of your list when looking to get married, it is still an important consideration. There are other mechanisms which can be put in place such as a pre-nuptial agreement which can provide you with more protection in the event of a subsequent divorce.
What can I do if I have a Declaration of Trust and I am already married?
Even if you are happily married, you should still look to protect your assets which are subject to a Declaration of Trust. This is because, as above, in the event of a divorce, the legal position concerning your Declaration of Trust is not certain. To provide you with more protection, a post-nuptial agreement should be considered.
If you are unsure of the legal position relating to your Declaration of Trust whilst going through a divorce, or, if you are due to get married/already married and wish to put more protective measures in place then do contact our Family Law team and we would be happy to help.
Please note, the advice in this article is relevant where you have married subsequent to entering into a Declaration of Trust, or are intending to get married. If you are un-married there are separate rules governing the implications of your Declaration of Trust and you should contact our Inheritance Trusts and Disputes team.