Q: My husband and I would very much like to help our daughter with a house deposit so that she and her boyfriend can get on the housing ladder. What concerns us, though, is that if they split up and the house is in joint names her boyfriend could walk off with half the deposit gifted to our daughter. Is there any way that we can prevent this happening?
A: You must decide if you want the money to be an outright gift or a loan. If it is a gift your daughter can ask her solicitor to draw up a Declaration of Trust confirming what financial contributions she and her partner have each made towards the property. This Trust document will set out what happens to any equity in the property if the relationship ends.
You can loan deposit monies to your daughter and her boyfriend. If there is a lender, they will need to approve the fact of the loan and if you want to secure the loan against the property the lender will need to consent to this also. The loan could be interest bearing but does not have to be – it is up to you.
If your daughter and her partner were to later marry your gift or loan can still be protected by a Declaration of Trust/charge on the property, or your daughter could if she wished have a prenuptial agreement drawn up. Whilst prenuptial agreements are not legally binding in the UK the Higher Courts in England and Wales have over the last 5 years increasingly taken into account the provisions of prenuptial agreements in financial proceedings associated with marital breakdown. Prenups can protect assets including savings, shares, property, future inheritances and pensions, and can even make provisions for pets.