Declarations of Trust, also known as Trust Deeds, are used to record the beneficial ownership, also known as equitable ownership, of a property between two or more parties.
There are numerous circumstances whereby parties do not have an equal interest in the equity, even though they may both legally own the property. Often, first time buyers have raised their deposits with the help of a gift from parents or even grandparents. A Declaration of Trust ensures that each individual owner protects the initial contribution which they made towards the purchase price. It allows them to protect the money that their family gave them in the event of the breakdown in the relationship.
Similarly, couples may invest in a second or subsequent property, from which they receive a rental income. A Declaration of Trust can be used to set out the beneficial ownership and also how the rental income is received, as often only one party receives the income (or the majority of it). This allows the correct income tax to be attributed to the rental income.
If you are purchasing a property with another person and making unequal contributions towards the purchase, are receiving unequal shares of any rental income received or are considering cohabiting with a partner and wish to ensure that your beneficial interest in your home is protected, we would strongly advise that you enter into a Declaration of Trust.
If your circumstances aren’t specifically referred to here but you feel you may benefit from a Declaration of Trust, we would be happy to talk this through with you.
Although the Declaration of Trust can be additional step in a perhaps already stressful situation, the benefit far outweighs this if there is a dispute with regard to the equity split at a later stage. Such disputes can be extremely lengthy and expensive to resolve, and could be avoided by entering into a simple document at the outset.
It is worth noting that if you have already purchased your property with another person, contributed to the purchase of a property with another person or have already agreed that your partner can share your home, it is not too late to enter into a Declaration of Trust. It is better to do so retrospectively than to not have one at all.
Neves charge a fixed fee for Declarations of Trust, allowing you to plan for costs during the conveyancing process. We are also happy to have an initial conversation with you about your requirements, in order to ensure that a Declaration of Trust would be right in your circumstances.