- Wills, Probate & Trusts
- A Declaration of Trust
A Declaration of Trust
A property purchase with a spouse or partner is often not equal as circumstances differ for both people involved.
One may have more savings than the other, comparative wages may not be on par and there could be a need for unequal financial input.
That’s OK, with both parties seeking the same goal and being happy with the arrangement.
Have you considered a Declaration of Trust to ensure the share you put in is the share you get out should you sell?
What is a Declaration of Trust?
A Declaration of Trust is a legal document that sets out the terms on which an asset, most commonly a property, is held in trust.
Declarations of Trust are prepared to record the share of ownership that the two joint purchasers are entitled to.
The document will record the terms on which the beneficial interest in the property is held and will also act as evidence of the agreement between the parties at the time.
Are there different types of Declaration of Trust?
There are two main types of this type of legal document:
- The Declaration of Trust can stipulate fixed shares for both parties, for example, a 60/40 percentage split, or can confirm a specific monetary amount that is to be paid to either party on the sale of the property. This is often more straightforward, but the parties may need to revisit the declaration in the future, for example, if one party made significant, expensive home improvements.
- Alternatively, the Declaration of Trust can provide for each share to be determined according to the parties’ individual financial contributions. For example, if one person pays more towards the mortgage payments, or pays for home improvements, then this increased contribution will be reflected in their ownership share. This is more complicated and requires good, accurate record-keeping to calculate the beneficial ownership shares.
Why make a Declaration of Trust?
There are many reasons why you would want to prepare a Declaration of Trust. Most commonly, they are prepared when one of the joint purchasers has contributed a significantly larger sum towards the purchase.
The Declaration of Trust can therefore protect them as the deposit amount is repaid upon the sale of the property.
Additionally, if someone receives a gifted deposit from a family member then the Declaration of Trust can be drafted so that this deposit amount is protected and returned to the person who gifted the monies upon sale, rather than being split between the owners. The same applies to contributions made from an inheritance.
Another major benefit is providing legal certainty as to what should happen when the property is sold. The Declaration of Trust will make this clear. It will also act as clear evidence of the parties intentions at the time of the property purchase.
How can Winns help?
Call the dedicated team at Winns for a no-obligation chat about your circumstances. We are happy to prepare Declarations of Trust and can provide peace of mind that your financial affairs are in order ahead of a house purchase or indeed after to reflect the ownership each party has.
With decades of experience, our team is diligent, compassionate, and proactive in delivering your wishes into a legally binding document.
Make the call today, for peace of mind in the future.
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Meet the Wills, Probate & Trusts Team
Rebecca Harbron Gray
Head of Wills, Probate & Trusts