The Trust of Lands and Appointment of Trustees Act 1996 (ToLATA) is legislation that enables unmarried, cohabiting couples who are splitting up to make use of trusts to resolve disputes over jointly owned property.
What is a trust?
Trusts are legal agreements in which one party, known as the ‘trustor’, places assets in the care of a second party, the ‘trustee’, for the eventual benefit of a third party, known the ‘beneficiary’ – for example, the trustor’s children when they reach adulthood. Where appropriate, trusts can be established for property, money, investments, land or any other resources or items of value. Trustors manage the assets held within the trust, working to protect them and increase their value in the best interests of the beneficiaries,
Trusts fall into two broad categories: ‘irrevocable’ – i.e. not changeable once established – or ‘revocable’, meaning they can be changed by the establishing trustor or trustors once up and running. Trusts are a useful tool for wealth management, estate planning and tax efficiency.
What is ToLATA?
Estranged cohabitees can use ToLATA is formalise the management of jointly owned property via specially created trusts. ToLATA provides a clear definition of the powers held by property trustees to make management decisions, to mortgage properties and to sell them. The beneficiaries of ToLATA trusts generally hold rights of occupation – meaning they can continue to live in the former family home, for example. Family courts hold the power to intervene when disputes arise.
TOLATA can provide a solution to disputes over ownership and whether a jointly owned property should be sold, as well as how the property should be divided between those owners. ToLATA applications are also not limited to those living in the property. A ToLATA application can be made by trustees and beneficiaries, such as mortgage companies or the trustees in a bankruptcy.
In order to reach a decision, family courts will consider such issues as:
- The original intentions behind the trust.
- Whether the property at issue is residential or let to tenants.
- Any potential impacts on the welfare of children living in the property.
- How a new trust might affect the interests of creditors, for example banks and mortgage providers.
ToLATA also provides a clear way for trustees to be appointed and for them to retire from the role. There are also procedures for beneficiaries who have reached adulthood to take on control of the trust. In addition, the Act ensure the protection of disabled or unwell beneficiaries who lack capacity to act on their own behalf.
If you are unmarried and own property together, or you at least plan on owning property together, we advise that you speak to us about a living together agreement.
What is a living together agreement?
Also known as a cohabitation agreement, these are legal agreements between partners that have not married. They define ownership of assets such as bank accounts, cars and homes, both while the couple are together and in the event of separation or the death of one partner. Such agreements provide reassuring clarity and a degree of protection for cohabitees, who otherwise lack the financial, property and inheritance rights held by married spouses. Without a living together agreement in place, cohabitees can find themselves with no rights to continue living in their home or to financial support if their relationship ends or their partner dies. Even their interest in jointly purchased items such as cars and property can be disputed.
Cohabitation agreements can even be used to define parental responsibilities and confer official next of kin status. The latter would otherwise automatically go to a spouse.
These legally binding agreements offer the reassurance that your property will be legally protected – but it is very important that they are correctly drafted, so legal advice is always recommended. Our team of leading family solicitors are here to protect you from any unfortunate circumstances should such a breakdown occur.
Complexity
ToLATA procedures can be very complex. The legislation includes strict rules in the interest of fairness, and the parties involved must adhere to these. Failure to do so may lead to large fines. Due to this complexity, we would advise anyone who is living with a partner to speak with a member of the Major Family Law team as soon as possible to arrange a free 45-minute consultation. In this call we will discuss any questions that you may have about your rights as a property owner and our expert will explain how to proceed with the application process.
Call us today
Major Family Law specialise in family law, making us the north east’s leading experts in family law matters for both married and cohabiting couples. We know the pain and stress of splitting up, and our friendly team are more than able to act in your best interests should you find yourself in need of assistance.
We offer competitive rates, ensuring that the best legal support in the North of England is affordable to anyone who needs it – so if you are seeking legal assistance, contact the Major Family Law team today. Alternatively, call our client relationship manager Helen on 01661 82 45 82 to book a free 45minute consultation today.
