A declaration of trust is a legal document that defines how property ownership is divided between two or more parties. It is commonly used by cohabiting couples to set out their respective shares in a property. However, a question often raised is whether marriage changes the terms of a declaration of trust. The short answer is that marriage does not automatically alter the terms, but there are important factors to consider, particularly around the legal and financial implications.
How does marriage affect the declaration of trust?
Once a couple marries, any declaration of trust they had previously agreed upon generally remains valid unless the document contains provisions to the contrary. The declaration will still dictate the ownership proportions unless formally changed through a legal process. The act of marrying does not modify these proportions or the legal standing of the trust. However, married couples might choose to review their arrangements, particularly if their financial situation changes. To alter the terms, a formal deed of variation may be required.
One reason to revisit a declaration of trust after marriage is to ensure it continues to reflect both parties’ intentions. Changes in financial circumstances or the acquisition of new assets may warrant an update. It is essential to seek legal advice if a couple intends to amend their declaration of trust post-marriage. As legal resources, such as Parachute Law, often advise, keeping the document updated can prevent disputes later.
Wider Financial Implications
Although the terms of a declaration of trust might not change, marriage can introduce new financial considerations, such as inheritance rights and tax obligations. For example, married couples enjoy more favourable inheritance tax rules, which may influence future decisions regarding property ownership.
Moreover, capital gains tax could become relevant, depending on how the property is dealt with. For more information, guidance on capital gains tax can be found through official resources, such as HMRC’s capital gains manual
In summary, marriage does not automatically alter a declaration of trust. However, reviewing the document after significant life events is advisable to ensure it still serves its intended purpose.