Q: Our daughter and her partner have been living together for over six years but due to having to pay London rents, and property prices rising, they have never managed to save enough for the deposit to buy a house. Now property prices in London appear to be coming down, so it would seem like a good time to buy and we are therefore considering giving them the deposit. What can we do to ensure the gift would be protected in our daughter’s favour if they should ever split up?
A: It is becoming increasingly common for parents to gift their children the deposit for a house. Further, most wish to ensure their offspring’s partner will not benefit if there should later be a split in the relationship. The simple answer to this is to set up a Deed of Trust.
In the Deed you can state to whom you gifted the deposit money. This will ensure your daughter retains ownership of it if they did ever split up. In the Deed you can also specify whether the monies were a gift, or a loan that needs to be repaid to you at some stage.
As your daughter and her partner are not married it may be that they have an informal arrangement about paying rent and other bills. If they wished to make a more formal arrangement when they purchase a house, the Deed of Trust could lay out each person’s responsibilities for outgoings and what happens to the property if they split up. You should all, however, note that if your daughter and her partner get married at some stage in the future it could affect the Deed, so that would need to be reviewed. When it comes to reviews, as parents you should consider updating your Wills to reflect the gift you have made, and your daughter and her partner should also consider making Wills.
This question has been answered by Ulia Choudhry, a Partner with GHP Legal. If you would like to speak to someone about this or any other legal matter, please visit our website www.ghplegal.com and use the contact us form, or call us on: Wrexham 01978 291456, Llangollen 01978 860313, Oswestry 01691 659194
