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Declaration of Trust

A declaration of trust, also defined as ‘Deed of Trust’, is significantly essential for joint investments, especially when multiple stakeholders are involved in property ownership. Like the Cohabitation agreement, determining what each person is entitled to and what will happen after the property is sold.

The properties have shown an immense increase in the pricing, in contrast with wages. Compared to the recent decade, the net value of properties rose distinctively, capturing dominant market investments.

Individuals or business persons seeking to find alternative ways to buy properties can collaborate joint investments within a property via the Declaration of Trust. Mostly, it isn’t easy to sponsor the complete purchase of properties, but with the Declaration of Trust, you can take support from the partner, investors, or relatives.

What is a Declaration of Trust?

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.

What does a Declaration of Trust do?

A Declaration of Trust provides security to every stakeholder involved in the ownership of the property. It also states the terms and conditions regarding profit margins regarding who will get what per their initial investments upon sale of the property.

For instance, if there is no existence of the Declaration of Trust, it will be difficult to identify repayment to stakeholders when the property is sold.

There are many objectives to sign a Declaration of Trust. Some of the top-listed factors include:

Purchase of Property By an Unmarried Couple

It is generally a common myth that couples cohabiting are protected by ‘common law marriage’. If you are not legally married or in a civil partnership, you do not qualify for the legal protections.

Instead, couples with legal marriage, recognized by the law, are more inclined to protect their rights. There is no guarantee that the court will treat both parties with an equal rights policy on separation.

A Declaration of Trust keeps you away from trouble, specifying the proportion of ownership and return on investment.

Reduce the Risk of Disagreements

If you are buying property, supported by the aid of any joint owner. You will be registered as the legal owner associated with Land Registry. But it does not define the proportion of investments put forth.

For the case of supportive investments, it can neglect the involvement of supporting participants. A Declaration of Trust protects owners from any disagreements and misunderstanding that may arise in the future.

Protection of Investments

If you are buying property for the first time, you can secure your investments with a Declaration of Trust aid. The property you are buying is not just a house. It’s a future asset that can bring you a fortune.

So, instead of getting excited and trusting what your partner has to say. Go for the ‘Declaration of Trust’ and protect your interest and benefits associated with the property.

Beneficial When One Party’s Name is Not on The Mortgage

Suppose you have moved in with someone, or contrary if someone has moved in with you. There will be only one person’s name on the mortgage. However, the other partner will be equally paying for the bills and other expenses.

To protect the beneficial interest of everyone, it is always considered better to get everything in writing to prevent complications and misunderstanding in the future.

What Should Be Included in The Declaration of Trust?

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:
  • The percentage of deposit contribution on the property from both parties
  • The amount contributed to mortgage repayments and other outgoing payments from each party
  • The percentage each party will own on the completion of payments
  • The profit shared to each party upon sale of property
  • The agreed value of the property on sale perspective

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.

When will you need a Declaration of Trust?

There are mainly two stances, for when you will need a Declaration of Trust.

Bought Property With Someone

Unless if you are not married to this person, or in a civil relationship, there are no laws that might protect your investments. It is better to keep a record of payments, such as deposits and ongoing payments.

Received Financial Help

If your parents have assisted you in payments, or any other individual has contributed to financing your purchase. They might want to get their share back one day when you will be earning profit.

Can You Overturn The 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.

Minor Changes

To update minor changes in the Declaration of Trust, a deed with updated clauses can be attached with the original one. The new deed document shall specify for which areas it is replaced.

Larger Changes

It is considered efficient to recreate the Declaration of Trust in case of a large number of changes. There could be multiple reasons for the changes concerning the Declaration of Trust.

For instance, renovation or upgrading on the property or change in stakeholders with a stake in the property. With the introduction of the new Declaration of Trust, the previous one is discarded.

An appropriately unambiguous Declaration of Trust is detailed and comprehensive. This is exactly the reason for it to be difficult to challenge in the court. A court may consider disregarding the Declaration of Trust if fraud or misinterpretation has been proved.

Significance of Declaration of Trust for Cohabiting Couples

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.

There's no better time than now

People rely on us, and we pride ourselves on our client-centered advocacy and representation.

Considerations for Joint Tenants

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.

How Can We Help in the Declaration of Trust?

We have the best team of expert solicitors on board, ready to advise & assist you in getting started with your Declaration of Trust. Over the years, we have helped many individuals and business professionals in acquiring the Declaration of Trust.

We have a firm belief that it is essential to safeguard and protect beneficial investments for futuristic prospects.

Important FAQs

How Much Does a Declaration of Trust Cost?
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.
Can a Declaration of Trust Be Revoked?
Well, technically yes! But then again, it is directly proportional to the availability of standard metrics required to revoke the Declaration of Trust. You have the right to revoke your deed of trust as per requirements. It is the writing that supports the agreement to acknowledge the lender a security interest in your estate.
How to Write a Declaration of Trust?
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.
What is a Declaration of a Trust Agreement?
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.
What is a Declaration of Trust For a Property?
The declaration of trust for property refers to a legally binding document with detailed standard operating procedures on investments and dealing in properties.
When is a Declaration of Trust Not Valid?
The declaration of trust is not valid in cases where:
  • Invalid address information is provided
  • Invalid amount of debt 
  • In case of Bankruptcy
Can I Write a Declaration of Trust On My Own?
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.
What Happens If You Get Married?
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.

Why Choose Us?

Our solicitors are experts in declaration of trust and so are ideally positioned to help you put in place future plans. We have helped many individuals and business owners across the country through the sensitive process of setting up a trust for you and the future of your loved ones.

How to Get in Contact

Please call us on 01234 350 244 or email us at info@dvsolicitors.com for further information and advice about our services. We will happily provide you with a free initial discussion about your individual circumstances.
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