Common Intention Trusts
What Is a Common Intention Trust?
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A Common Intention Trust arises where:
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Property is held in one person’s name (or in joint names), and
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There is evidence that the parties intended the beneficial ownership to be shared in a particular way, and
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One party has acted to their detriment in reliance on that shared intention
The courts will then impose a trust to give effect to that intention, even if it is not reflected in the legal title.
In simple terms, the law looks beyond paperwork to ask: “What did the parties really agree would happen?”
How Common Intention Trusts Arise
Common intention trusts usually arise in domestic and family contexts, such as:
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Unmarried couples buying or living in a property together
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One party owning a property but both contributing financially
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Situations where mortgage payments, renovations, or household expenses are shared
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Arrangements where one party gives up career opportunities or housing security in reliance on shared ownership
The intention does not always need to be written down. It may be inferred from conduct.
Express vs Inferred Common Intention
There are two main ways a common intention may be established:
Express Common Intention
Where the parties clearly agreed—verbally or in writing—how ownership would be shared, even if that agreement was never formally recorded in a deed.
Inferred Common Intention
Where no express agreement exists, but the court infers intention from behaviour, such as:
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Financial contributions to purchase price or mortgage
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Paying for major renovations or extensions
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Long-term assumption of joint responsibility for the property
In both cases, detrimental reliance is key: one party must have acted in reliance on the shared understanding.
How Is This Different from Legal Ownership?
Legal ownership determines whose name appears on the title deeds. Beneficial ownership determines who actually owns the value. ​Common Intention Trusts exist precisely because these two can diverge. ​For example, a property may be legally owned by one person, but beneficially owned in defined shares by two people under a common intention trust.
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"Legal ownership determines whose name appears on the title deeds. Beneficial ownership determines who actually owns the value."
Why Common Intention Trusts Matter in Estate Planning
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Common Intention Trusts are critically important because they can:
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Override assumptions based on title deeds
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Affect what forms part of a person’s estate
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Change how property passes on death
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Alter inheritance tax and long-term care assessments
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Create or defeat claims under a will or intestacy
Failing to recognise a common intention trust can result in serious planning errors.
Common Intention Trusts and Death
If a person dies believing they own 100% of a property, but a common intention trust exists, then:
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Only their beneficial share forms part of their estate
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Their will may not operate as expected
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Executors may distribute assets incorrectly
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Disputes can arise between surviving partners and family members
This makes early identification and clarification essential.
Relationship to Declarations of Trust
A Declaration of Trust is a formal document that expressly records beneficial ownership. A Common Intention Trust is, in many respects, what the law creates when no declaration exists.
Where possible, relying on implication is far less desirable than recording intentions clearly. From a planning perspective, documenting intention early is always preferable to litigating it later.
HMRC and Tax Position (Overview)
For tax purposes, HMRC generally follows the beneficial ownership, not the legal title.
This means:
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Income is taxed according to beneficial shares
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Capital gains are assessed by reference to beneficial ownership
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Inheritance tax applies only to the deceased’s beneficial interest
However, where beneficial ownership is unclear or disputed, HMRC may default to the legal position unless evidence is provided.
When Common Intention Trusts Cause Problems
While they can protect fairness, common intention trusts can also create difficulty where:
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Intentions were vague or inconsistent
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Evidence is weak or contradictory
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Relationships have broken down
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One party disputes the existence of any shared intention
These situations often result in costly disputes, particularly after death.
How CHC Legal Assists
CHC Legal assists clients in relation to Common Intention Trusts by:
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Identifying whether a common intention trust may exist
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Reviewing property ownership and contribution history
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Advising on estate and succession implications
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Recommending formalisation through declarations or restructuring
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Coordinating property ownership with wills and trust planning
Our objective is always to replace uncertainty with clarity.
Summary
A Common Intention Trust is the law’s way of enforcing fairness where formal ownership does not reflect reality. If you share property ownership, have contributed to a property you do not legally own, or are relying on informal understandings, the time to address this is now, not after a relationship breakdown or a death. Once disputes arise, options narrow and costs escalate.
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