A Declaration of Trust refers to a legally binding document explaining the contribution of investments and ownership while buying property.
It is responsible for gathering information concerning stakeholders and their associated share in the property. Additionally, it also states the terms of merits for how the profit will be shared among stakeholders if the property is sold.
Based on various situations, an expert solicitor can tailor the deed of trust to meet your requirements. You can add different clauses based on the suitability to protect the financial interest of the interacting party. A Declaration of Trust must include the following details:
In addition to the above clauses, you can add further concerns to account for uncertainties that may arise in the future. There can be multiple arrangements befitted for consideration of equitable interest. For instance, if one party has shared a distinct proportion in deposit. They can receive the investment with a large sum of profits upon sale.
Contrary, if someone is paying less amount in mortgage repayments, in that case, share proportions be calculated annually. The annual repayments will decide, who has submitted a larger amount, and the ratio of ownership and profit shall be provided accordingly.
There are mainly two stances, for when you will need a Declaration of Trust.
The main reason to design a declaration of trust is to remove any ambiguity in the investment plan on properties as profit distribution on future investments is mentioned in the deed. The prime motive of the Declaration of Trust is to safeguard the investments from misunderstandings, confusion, and change of minds.
It is difficult to overturn the Declaration of Trust, although circumstances can change sometimes. If all stakeholders involved in the Declaration of Trust present their consent in an amendment, then the legal document can be overturned.
The fastest-growing family types in the UK account for cohabiting couples, as many people choose to stay together without being married. According to the ONS, there were around 3.3 million cohabiting couples in the UK.
Many couples would buy a house together but would eventually have to depart their ways on separation. It is better to devise a Declaration of Trust to keep good terms even after separation.
When you proceed with buying a joint property, equal ownership in the property is assumed thereafter. Unfortunately, if any one of you passes away, the share will be automatically inherited by the other. But you still can register for the Declaration of Trust to protect your beneficial interests.
Since 1998, the Declaration of Trust panel has been introduced in the Land Registry form. Later on, a voluntary joint form was introduced in Estate registrations. This enables homeowners to present with their beneficial interests from the beginning.
The solicitor’s fees vary based on the experience and location of the firm. The average cost for a Declaration of Trust may be around £350 and £1,000 based on the firm’s representation, the complex nature of the document, and additional required processes..
You can write a declaration of trust on your own, but an expert solicitor will be highly preferable. A tailored deed designed by a solicitor will have everything fairly included and aligned with investment prospects.
The declaration of trust for property refers to a legally binding document with detailed standard operating procedures on investments and dealing in properties.
The declaration of trust is not valid in cases where:
You can find already prepared templates from different websites, and it will cost you cheaper than hiring a solicitor and drafting a declaration of trust. But, since a solicitor is well experienced in managing such affairs, they can design an unambiguous and well-oriented trust deed.
If a cohabiting couple gets married, the Declaration of Trust will be suspended following Matrimonial Causes Act 1973. Under this act, a court can rule in settling the divorce and managing the property.
A Declaration of Trust provides security to every stakeholder involved in the ownership of the asset. It also states the terms and conditions regarding profit margins as to who will be responsible for what proportion of the asset.