My partner and I plan to buy a property in the coming months. We’ve been together for seven or eight years, although we don’t intend to get married any time soon. My parents are going to gift me £50,000 for my half of our deposit, on the proviso that my partner and I sign a cohabitation agreement. They say it’s necessary to protect my interests. If we don’t sign an agreement, I’m worried they won’t help us out. Is the agreement really necessary? And would it protect my interests or theirs?
Caroline Keeley, partner and head of family law at TWM Solicitors, says some people assume that after being together for a long time, the financial contributions you make to your relationship, especially towards the purchase of a property, would automatically be protected. Unfortunately, that’s not the case.
If you are unmarried and your relationship breaks down, a court will have to assess what you and your partner intended to happen regarding the property. A judge will look at contributions like your deposit, mortgage payments and renovations. They will want to see evidence of your intentions and without a written agreement, that will be hard to establish.
Your parents are right, a cohabitation agreement is the best way to clarify what you intend to happen with the property if you split up. It can set out how you both want to handle joint property, mortgage payments, and other financial matters like joint accounts. This agreement can be very useful if a dispute arises later.
However, it’s important to note that a cohabitation agreement can be challenged on the grounds of fraud, undue influence, or misrepresentation. To minimise these risks, it’s crucial that both of you receive independent legal advice before you sign the agreement.
The agreement would only be between you and your partner, meaning your parents wouldn’t be directly involved in it. However, it’s essential to consider how you document your £50,000 deposit. If you want to have this amount returned to you when the property is sold, it’s important that the agreement states this clearly.
For extra protection, you should also consider a declaration of trust, which records both you and your partner’s beneficial interests in the property. This could be a fixed amount — such as the £50,000 — or a percentage of the property’s value. The declaration of trust will ensure that your interests are legally recognised and is binding on both parties.
If the £50,000 from your parents is a gift, this arrangement will protect it. However, if your parents are lending the money and expect repayment, a loan agreement would also be needed. This is because a cohabitation agreement and declaration of trust do not protect loans in the same way they protect gifts.
In that case, your parents should consider having a formal loan agreement in place. This may also include a restriction on the property title to ensure repayment.
You will need to decide whether a cohabitation agreement, a declaration of trust, or a loan agreement, or perhaps all three, will provide you with the security you’re looking for. But the main thing to be aware of is that, if there is no formal written agreement regarding the £50,000 gifted by your parents, there is no security for this money.
How can I best approach family business philanthropy?
My uncle retired recently and I took the reins of our family business — the third generation. It’s important to me that the business is something my own children want to take on in time and it looks like a part of their interest will be our social, charitable legacy. How can I best approach philanthropy to make the most impact for our chosen causes? Is there anything I can do to help ensure that any plans put in motion are done in a sustainable manner in the hope it will become a long-term initiative my daughters can one day take over?
Jack Henderson, senior associate and philanthropy lead at Stonehage Fleming, says it can be very constructive to involve your children with your family philanthropic interests as a way of familiarising them with your wider business interests.
Naturally, philanthropy is highly personal. Start by considering your collective family values: what types of causes are important to each of you; and are there principles that guide your business approach which you’d like to incorporate into how you deploy your family’s “social capital”?
Allow your children to have a central voice during these discussions as this will help encourage their involvement, they may well see the world from a different perspective. Similar to your business strategy, you may wish formally to capture your strategy and should consider its regular review together.
Whereas traditional giving approaches have seen individuals and families make regular or one-off cash donations to causes, contemporary approaches take a more considered view with donors less focused on immediate impact and short-term results. Increasingly, philanthropists are managing their ventures as they would a portfolio of business interests.
Our next question
I moved to the UK from South Africa just before the previous Conservative government’s changes to non-dom tax rules were announced. I have my own business and some offshore trusts and have concerns about when these will begin to be taxed under UK law. I’m wondering whether I should put long-term roots down here (my children are approaching secondary school age), and how my tax position will be affected from April 6 2025 following the Budget announcements and non-dom changes.
Building a portfolio around “venture philanthropy” principles is growing in popularity and mixes business considerations with support for causes deemed worthy of support. Rather than one-year grants, donors often make longer term investments which promote the charity’s growth, sustainable mindset and financial longevity.
You’ll want to consider how you review your portfolio and the causes being supported. While you’ll likely have access to traditional progress reports, you and your daughters’ increased involvement will allow you to be positioned as a collaborative partner alongside the charity. The experience that you will bring to a cause will help ensure your giving has far greater structure and lasting impact.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to money@ft.com.
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