Legal News | 29.04.21

Constructive trusts, deconstructed

Last week we considered the benefits of recording the ownership of the family home in a Declaration of Trust, particularly for cohabitees in the event of relationship breakdown.

This week we consider the alternative…

Upon relationship breakdown, the former family home is often the most contentious issue but the courts do not have the same wide powers to distribute a cohabiting couple’s property that they have to distribute a married couple’s or civil partners’ property. Instead, the courts have to rely on the concept of constructive trusts.

A constructive trust is imposed by the court when it would be unfair to allow a person (A) to enforce their strict legal rights in property against another (B). It requires A to hold part of their property upon trust for B. In the context of relationship breakdown, it could mean one cohabitee receives a greater share of the former family home than they would otherwise.

When deciding whether to impose a constructive trust, the court will try to give effect to the cohabitees’ intention as to ownership of the former family home. This will be easier if the cohabitees have recorded their intention in a Declaration of Trust (for more information, please see last week’s newsletter: www.wansbroughs.com/news-events/its-my-house-not-yours/).

In the absence of a Declaration of Trust, the court will infer the cohabitees’ intention from all the circumstances. The court will consider contributions to the former family home, both financial (e.g. mortgage repayments) and non-financial (e.g. housekeeping). As a last resort, the court can impose a constructive trust based on what it considers to be fair.

Needless to say, recording the ownership of the family home in a Declaration of Trust could avoid expensive and uncertain litigation in the unfortunate event of relationship breakdown. If you would like help preparing a Declaration of Trust, please contact your usual Wansbroughs contact or e-mail wealth@wansbroughs.com.