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Fair declaration of trust

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Comments

  • fairy_lights
    fairy_lights Posts: 9,220 Forumite
    Comms69 wrote: »
    I agree, if you don't trust your partner it's absolutely worth it.
    Trusting your partner doesn't mean your relationship won't breakdown somewhere down the line. It would be foolish not to protect your assets.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    The don't do it mob don't count for death where the relationship is over and unless 100% is going to the OH you need a plan for how equity is distributed.

    There are loads of scenario work through them all.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    My OH and I also did a declaration of trust. I was putting in 100% of the deposit of 80k, he put in nothing. Ours says that if we split and sell I get my 80k back, the rest is shared equally. I am happy with that.

    We were also told we had to make a will, in the eventuality of a death. In this case my full share will go to him, and vice-versa if either of us die.

    If you end up getting married i think the DOT becomes irrelevant anyway.
  • Comms69
    Comms69 Posts: 14,229 Forumite
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    Deleted_User wrote: »
    My OH and I also did a declaration of trust. I was putting in 100% of the deposit of 80k, he put in nothing. Ours says that if we split and sell I get my 80k back, the rest is shared equally. I am happy with that.

    We were also told we had to make a will, in the eventuality of a death. In this case my full share will go to him, and vice-versa if either of us die.

    If you end up getting married i think the DOT becomes irrelevant anyway.
    So you're worth more dead than alive... :)
  • Grezz24
    Grezz24 Posts: 232 Forumite
    First Anniversary
    Comms69 wrote: »
    So you're worth more dead than alive... :)

    surely most people are with life insurance / 3x work salary to spouse / house equity etc.
  • Comms69
    Comms69 Posts: 14,229 Forumite
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    Grezz24 wrote: »
    surely most people are with life insurance / 3x work salary to spouse / house equity etc.
    Well not quite, unless you only plan working for two years for example.


    In this case it's literally better to hope for death than separation.
  • ReadingTim
    ReadingTim Posts: 3,970 Forumite
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    Purchase price (100%) = deposit + mortgage
    If purchase price = £410k then deposit = 24% of purchase price (£100k/£410k)
    Partner 1 contributes £90k of £100k deposit or 90% of 24% of total purchase price (so 21.6%).
    The mortgage component (76%) is split equally (so 38% each), therefore in total partner 1 has contributed to/is liable for 59.6% (21.6 + 38) of the total purchase price. Partner 2 has contributed to/is liable for 40.4%.

    This should be the split of the net sale proceeds, regardless of whether prices have gone up or down - each gets back the same proportion of what they put in, or were liable for during the life of the mortgage or relationship, whichever is the shorter.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    ReadingTim wrote: »
    Purchase price (100%) = deposit + mortgage
    If purchase price = £410k then deposit = 24% of purchase price (£100k/£410k)
    Partner 1 contributes £90k of £100k deposit or 90% of 24% of total purchase price (so 21.6%).
    The mortgage component (76%) is split equally (so 38% each), therefore in total partner 1 has contributed to/is liable for 59.6% (21.6 + 38) of the total purchase price. Partner 2 has contributed to/is liable for 40.4%.

    This should be the split of the net sale proceeds, regardless of whether prices have gone up or down - each gets back the same proportion of what they put in, or were liable for during the life of the mortgage or relationship, whichever is the shorter.

    Algorithms should work for all values and all time periods(as you point out)

    That fails the simplest of does it smell right tests

    Sell on day one adjust for cash costs(not mortgage as nothing paid)

    P1 put in £90k gets back £59,600
    P2 put in £10k gets back £40,400

    Maybe you missed something important from your description because as it reads now it is far from ideal.
  • Tom99
    Tom99 Posts: 5,371 Forumite
    First Post First Anniversary
    ReadingTim wrote: »
    Purchase price (100%) = deposit + mortgage
    If purchase price = £410k then deposit = 24% of purchase price (£100k/£410k)
    Partner 1 contributes £90k of £100k deposit or 90% of 24% of total purchase price (so 21.6%).
    The mortgage component (76%) is split equally (so 38% each), therefore in total partner 1 has contributed to/is liable for 59.6% (21.6 + 38) of the total purchase price. Partner 2 has contributed to/is liable for 40.4%.

    This should be the split of the net sale proceeds, regardless of whether prices have gone up or down - each gets back the same proportion of what they put in, or were liable for during the life of the mortgage or relationship, whichever is the shorter.


    [FONT=Verdana, sans-serif]As getmore4less says a straight 59.6%/40.1% does not work until all the mortgage is paid off.[/FONT]
    [FONT=Verdana, sans-serif]That is why you need a dynamic formula which will adjust as time goes by and prices increase and the mortgage is gradually paid off eg:[/FONT]
    [FONT=Verdana, sans-serif]
    [/FONT][FONT=Verdana, sans-serif]Partner 1: 21.95% (90/410) of the gross sale price less cost of sale plus half of remainder.
    [/FONT][FONT=Verdana, sans-serif] Partner 2: 2.44% (10/410) of the gross sale price less cost of sale plus half remainder.[/FONT]
    [FONT=Verdana, sans-serif]
    [/FONT][FONT=Verdana, sans-serif]Its the remainder part which will vary from £0 on day two up to the remaining 75.61% of property value when the is no longer a mortgage.
    [/FONT]
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    The simple adjustment to what RT wrote
    This should be the split of the net sale proceeds, regardless of whether prices have gone up or down - each gets back the same proportion of what they put in, or were liable for during the life of the mortgage or relationship, whichever is the shorter.

    net sale proceeds(before taking off the mortgage) then pay 1/2 the mortgage from your share.

    By net after mortgage you don't account for the liability bit properly

    Does the same as what Tom has above
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