Impact of Third Party Ownership within Divorce

Introduction

In family law, property disputes rarely involve just bricks and mortar; they focus on fairness, relationships, and the financial disentanglement of lives. In this blog, we explore the Impact of Third Party Ownership within Divorce. For example, the Family Court case of AB v CD and another [2025] EWFC 191 (B) demonstrates how ‘common intention’, ‘constructive trusts’ and ‘resulting trusts’ influence the outcome of financial remedy proceedings, especially when legal title and beneficial ownership diverge. Here, the court needed to determine whether a plot of land, legally in the wife’s son’s name, truly belonged to him or formed part of the matrimonial assets to divide between husband and wife.

Case Background

• Marriage context: Husband and wife purchased their family home in 2012 for £975,000.
• Additional land: They bought an adjacent plot for £60,000 and put it in the wife’s son’s name to avoid stamp duty.
• Financial facts: The husband and wife funded the entire purchase; the son contributed nothing.
• Use of the land: They incorporated the land into the couple’s equestrian property, improved it, and used it without the son’s involvement.
• Dispute: The wife claimed she had gifted the land to her son to help him feel part of the family. The husband argued the land always formed part of the matrimonial property and was held on trust for the couple.

Family Law Issues at Stake

Is the Land Part of the Matrimonial Assets?

In financial remedy proceedings, the court must determine the full extent of the parties’ assets before it divides them fairly. If the land represented a genuine gift to the wife’s son, the court would exclude it from the matrimonial pot. However, if the court determined the spouses held it on trust, it would include the land in the division.

The Role of Trust Law in Family Proceedings

Even in family law, courts apply trust principles. Accordingly, the court considered:

• Common intention constructive trust – Did the spouses share an intention to own the land together, even though legal title belonged elsewhere?
• Resulting trust – Did the spouses’ financial contributions create a presumption of beneficial ownership?

The Court’s Reasoning

Lack of Evidence for a Gift

Firstly, the court found no written gift deed or contemporaneous record. Moreover, the wife misled solicitors and planning authorities about ownership. In addition, the couple’s actions, exclusive use, improvements, and inclusion in valuations indicated joint beneficial ownership.

Common Intention Constructive Trust Established

Furthermore, the court inferred a shared intention from the couple’s funding and use of the land as part of the matrimonial home. Additionally, the husband contributed to the purchase and development based on that shared understanding, establishing detriment.

Resulting Trust as a Fall-back

Even if the court could not establish common intention, the spouses’ full funding of the purchase created a resulting trust in their favour.

Illegality and Stamp Duty Avoidance

Although the couple arranged to avoid stamp duty, the court still recognised the trust. Indeed, the illegality remained incidental, and fairness required recognising the spouses’ beneficial ownership.

Outcome

• Legal title: The court left legal title with the wife’s son.
• Beneficial ownership: The court allocated 50:50 between husband and wife.
• Asset treatment: The court included the land in the matrimonial assets for division in the financial remedy proceedings.

Why This Case Matters in Family Law

Clarity in Ownership Is Vital

Consequently, if a property represents a gift, especially to a third party, parties must document it to avoid disputes.

Trust Law Bridges the Gap

Similarly, family courts apply constructive and resulting trust principles to determine the true extent of matrimonial assets.

Illegality Doesn’t Always Defeat a Claim

Even when parties pursue tax avoidance, the court may still recognise beneficial ownership if fairness demands it.

Behaviour Speaks Volumes

Notably, the court gives weight to long-term use, improvements, and inclusion in planning documents over unsupported verbal claims of a gift.

Takeaway for Families and Practitioners

AB v CD and another reminds separating couples: always clarify intentions when purchasing property, especially if held in someone else’s name. Also, financial remedy proceedings examine substance over form. Who paid, who used, and what the parties intended. Trust law concepts like common intention constructive trusts can determine whether an asset enters or leaves the matrimonial pot. Ultimately, this case shows that in family law, beneficial ownership hinges not on the name on the title deed, but on fairness, contribution, and intention.