Like a declaration, but also covering clauses that state how the property is going to be held, its purpose, how the joint owners will sell in the future or restrictions stopping certain actions taking place.

Declaration of Trust

by:

Andrew Boast

Updated:

13/07/2020

Read by:

27,877

6 min read

A declaration of trust is a very simple written declaration that evidences that a bare trust exists between joint owners of property (either legal and/or beneficial). When related to property, the declaration can be as simple as "I Andrew Boast declare that I hold the Property described as ADDRESS on trust for my wife Claudine Boast absolutely" . In this example Andrew is declaring he holds the property on trust for Claudine and Claudine is entitled to all equitable benefit from the property and all income from it belongs to her as the 100% Beneficial owner of the property. We have deed of trust solicitors so please contact us on 0333 344 3234 for help.

There is confusion, however, in the general use of the term declaration of trust during the conveyancing process because it is confused with a Deed of Trust. A deed of trust includes a declaration of trust within it, as above, however it goes on further to set out the intentions of the parties in the co-ownership of the property. It is a far more robust legal document and is signed by all parties and witnessed. We go into more detail around the risks of a simple declaration, especially where the party with the absolute beneficial interest wants to force a sale.

Can you make a Declaration of no interest in property?

This is known as a Declaration of no interest in property - read the article find out how to make such a declaration.

In the declaration of trust template example above, the term 'absolutely' means that there are no additional clauses that you would find in a deed of trust. If there were additional conditions set out within the declaration then the word absolutely wouldn't be stated. If the beneficial interest isn't held absolutely then the declaration should state the percentage each beneficial owner has (for example Andrew owns 40% of the beneficial interest and Jane owns 60%). The declaration is drafted on a piece of paper and signed by the legal owner with no need for a solicitor to be involved in its preparation, although read on to understand the limitations of the declaration.

What is included within a Declaration of Trust Property?

Confirm the intention between the parties to create a trust
Detail what is being held on trust (this is normally the property address)
Who has the beneficial interest (if held absolutely then the beneficial interest split isn't stated)

A declaration is different to a deed of trust and we go on to highlight the key differences. We have a solicitor who specialises in drafting trusts so please get in contact if you need any help on 0207 112 5388 or email help@samconveyancing.co.uk

Did you know?

A Declaration can be verbal, although most often it is written down. The declaration is only signed by the legal owner/s and is not witnessed.

Frequently Asked Questions

Who drafts the declaration?

It is a self declaration that the legal owner of the property normally drafts which they hold on trust for the beneficiary. It is important to note that the declaration:

does not transfer the legal title
is not a deed and no reference of a deed can be included on the document
is signed by the legal owner/s only - the beneficiary does not need to sign it
is not witnessed (like a deed)
is not registered as a restriction at the Land Registry
can be back dated (unlike a deed of trust) subject to evidence being provided to demonstrate that the trust was in existence prior to when it was drafted*

* If you have previously declared income from the property in different beneficial shares in the past then you cannot back date the declaration.

What is the difference between a declaration of trust and a deed of trust?

A declaration simply states the beneficial interest split of a property between people and doesn't include any other legally binding clauses where as a deed of trust includes a declaration and it has the differences:

Clauses and Intentions. A deed will include clauses that state how the property is going to be held, its purpose, how the joint owners will sell in the future or restrictions stopping certain actions taking place.
Registered at the Land Registry. A restriction such as a Form A or Form B can be applied against the legal title to protect the interest of the beneficial owners - especially if one of them isn't a legal owner.
Signed as a deed in front of witnesses. A deed is a more robust legal agreement unlike a simple declaration which is not signed, a deed needs to be be signed and the signature witnessed. See how to execute a deed

A deed of trust offers greater protection for the beneficiary who is not registered as the legal owner and as such the majority of express trust are drafted as a deed of trust.

How legal is a declaration of trust?

A declaration is legally binding as long as it is:

drafted by the legal owner;
on a property the legal owner has a right transfer the beneficial interest;
on a property held solely or as tenants in common;
not avoiding bankruptcy proceedings; or
not for any criminal activity.

How is a declaration of trust enforceable?

On sale the legal owner uses the declaration to distribute the proceeds from the property to the beneficial owner. The challenge with this though is the beneficial owner has not rights to stop the sale, nor are they made aware of the sale taking place as they do not have a restriction registered at the Land Registry. This is why it is incredibly important to decide whether you feel a declaration offers you appropriate security, or if you should draft a deed of trust instead.

A deed of trust still affirms the beneficial interest split, however with it being registered nd with the additional clauses often included such as selling rights and property management intentions, a deed has a greater protection for all parties involved to ensure their original intentions are handled accordingly.

How much does a Declaration of Trust cost?

Most conveyancing solicitors will draft you a basic declaration at a cost ranging from £240 to £500 Inc VAT. There are however more comprehensive legal agreements that set out not just the deposit share, but also mortgage repayment contributions, what happens if your relationship breaks down and even how to sell when you don't both agree to.

We draft deed of trusts for our clients and for any joint owners looking to clearly set out their intentions between them and the other tenant in common.

Can you do a declaration of trust after purchase?

You can change the beneficial ownership of property at any time after you purchase the property. There are however tax implications for transfers of beneficial interest. Read more on this here - Stamp duty on transfer of property between spouses

Do you need to register a declaration of trust at the Land Registry?

A declaration does not get registered at the Land Registry.