Declarations of Trust
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A declaration of trust, sometimes called a deed of trust, is a legally binding document that records the financial arrangements between joint owners of a property. The aim of the declaration is to record each person’s initial contribution to the property, their ongoing financial responsibilities, and what will happen should the property be sold or if one person wants to be bought out.
You may want to consider creating a declaration of trust in the following circumstances:
- If you are buying a property and are cohabiting but unmarried
- If you are buying property with a friend or business partner
- If you are buying using money you have been lent by a friend or relative
In these cases, a declaration of trust can protect your interest in your property. The declaration records how much each person has contributed to the deposit for the property (including people who are not living in the property, for example parents providing a loan or gift as a deposit), how much each person should contribute to mortgage payments, and how shares will be divided should the property be sold off.
A declaration of trust also acts as a true account of ownership, superseding mortgage and land registry records. When couples contribute different amounts to the deposit, parents loan their children money for a deposit, or when one party is prevented from having their name on the mortgage (for example if they already have a mortgage on another property), then a declaration of trust can safeguard these parties’ interests and ensure that in the event of a relationship breaking down or some other unforeseen eventuality, that any ambiguity will be avoided.
When Should A Declaration Of Trust Be Created?
There is no specific time that a declaration of trust should be made, but we would advise doing so as early as possible into property ownership. You never know what might happen in the future, and a declaration of trust provides valuable insurance against any unforeseen disputes or disagreements.
A declaration of trust is a legally binding document that changes the ownership of a property, and as such it should not be made lightly. You should make sure that all parties – both registered and true owners – are in agreement about the declaration, and that everything contained within is accurate, especially when it comes to proportions of ownership. There are no set rules on what to include in a declaration, and we would advise contacting an experienced and knowledgeable legal expert for advice and guidance on how to create a declaration that meets your specific needs.
What We Can Offer You
Our Private Client team have helped many couples, friends, and business partners protect their money with a declaration of trust. Our team understand that every situation is different, and so every declaration of trust should be a bespoke agreement tailored to your needs and sensitive to your circumstances.
If you are looking at purchasing a property, or lending someone else the money to do so, and are interested in finding out how a declaration of trust could work for you, contact our Private Client team today.
Our Past Cases
Below are some examples of Declarations of Trust our Private Client team has prepared in the past:
- Prepared declarations of trust which ensure both initial and future contributions are accounted for and that the co-owners have ‘floating shares’ which reflect their ongoing financial contributions.
- Prepared numerous declarations of trust to ensure funds parents are contributing towards the purchase of a property for their child are protected.