Sham Declarations of Trust Over London Properties

Katie de Swarte

Declarations of trust over London properties found to be a ‘sham’

Property trusts are a legal tool often utilised to mitigate potential tax liabilities and protect significant assets for the benefit of loved ones. However, if a trust is purportedly set up to disguise the asset’s true ownership or defeat a person’s legal claim, the court can treat it as void and of no effect.

Recently, declarations of trust executed by the property owner were found to be ‘sham’ documents – used to place the properties out of reach of his surviving wife and children (Gabriela Mozerle Teixeira v Amir Ahmad Moaven & Ors [2026] EWHC 1215 (Ch)).

Property trusts

Property trusts are often used to mitigate inheritance tax, ring-fence the property from divorce settlements and care home fees, and manage assets for the benefit of loved ones. The trustees are the legal owners of the property, holding it on trust for the beneficiaries set out in the trust document.

If a trust is set up that does not accurately reflect the true ownership of the property or is used as a deliberate deprivation of assets, it may be considered invalid and of no effect.

What happened in this case?

In Teixeira, Abbas Moaven was just 44 when he died in May 2012 from an aggressive cancer. He was survived by his wife Gabriela and two young children. Abbas made a Will the month before his death, leaving his estate to his wife and children in equal shares. The children were not to inherit their respective share until they were at least 26 years old.

However, the estate administration was significantly delayed because of several issues in dispute, particularly the actual ownership of four London properties. Abbas had purchased each property (including two in Kensington) between 1996 and 2004 in his sole name. Gabriela and the children lived in one of the properties.

The day before making his Will, Abbas executed four identical declarations of trust. These purported to confirm a long-standing arrangement by which Abbas, his mother and his brother had contributed towards the purchase funds; and they held each property on trust for themselves in equal shares.

If the trust documents truly represented the reality, only Abbas’s beneficial interest would form part of his estate – meaning a substantially lower valuation of his total estate. Gabriela and the children challenged the declarations of trust.

The judge concluded, on the evidence, that it was clear that the declarations of trust were intended to conceal Abbas’s true ownership of the properties to reduce the size of his estate and, thereby, reduce the amount available to Gabriela and the children.

The declarations of trust were deemed a sham – “simply, deceitful forms of words”. Abbas had always been the sole legal and beneficial owner of the properties. The documents had no effect in law and all four properties formed part of the estate.

What does this mean?

The decision makes clear that the true legal and beneficial owner of a property cannot hide behind a trust document and attempt to place the asset beyond the reach of genuine claims.

If you are considering setting up a property trust, it is important that the trust documents accurately reflect the true circumstances, otherwise there may be a risk of a legal claim in future. Always take prompt advice from specialist solicitors if you are involved in a trust dispute involving property or any other type of asset.

Get in touch

The contentious trusts and probate team at Osbornes Law represents clients in a range of complex trusts disputes. If you have any concerns about the validity of a purported declaration of trust, please get in touch with the team for expert advice. You can contact us by:

• completing our online enquiry form;
• or calling us on 020 7485 8811