What is a Declaration of Trust?

Specialist family solicitor, Kuba Kubiszyn, looks at what a declaration of trust is, and asks other important questions around this type of agreement.

A Declaration of Trust is a legal document that specifies the ownership interests and rights of individuals in a property. It is particularly useful in the following instances:

• where multiple parties are involved in the purchase or ownership of a property, or
• where one party contributes more to the purchase price than the other

In these circumstances, this document offers clarity and protection for each party's financial contributions and entitlements.

Do I need a Declaration of Trust?

A Declaration of Trust is advisable if you are purchasing property with another person and want to ensure that your financial contributions and ownership interests are clearly defined and protected. This is particularly important if:

• Contributions towards the purchase price, mortgage, or maintenance are unequal.
• You want to protect your investment in the event of a sale or relationship breakdown.
• You wish to avoid potential disputes by having a legally binding document outlining each party's rights and responsibilities.
• Your mortgage lender requires it as part of their lending criteria.

A Declaration of Trust on its own may not always be sufficient, so it would be advisable to check with a family law solicitor whether anything else could be done to ensure your interest is protected. Married couples, for example, would need to consider a postnuptial agreement, while those intending to marry, should look at a prenuptial agreement.

Can a Declaration of Trust be challenged?

While a Declaration of Trust is a legally binding document, it can be challenged under certain circumstances. Challenges may arise if:

• There is evidence of fraud, misrepresentation, or undue influence at the time the document was created.
• The document does not accurately reflect the intentions of the parties involved.
• There have been significant changes in circumstances that were not accounted for in the original agreement.

It is important to ensure that the Declaration of Trust is drafted clearly and accurately to minimise the risk of disputes or challenges.

How long does a Declaration of Trust last?

A Declaration of Trust remains in effect until the property is sold or until the parties involved decide to amend or terminate the agreement. It is a flexible document that can be updated to reflect changes in circumstances, such as additional contributions or changes in ownership interests. It is advisable to review the Declaration periodically to ensure it remains relevant and accurate.

Can you have a Declaration of Trust as Joint Tenants?

Joint tenancy typically means equal ownership and the right of survivorship, meaning that if one co-owner predeceases the other, the surviving owner will automatically get the deceased party’s interest in the property. In order to specify ownership via a Declaration of Trust, parties can “sever” the joint tenancy to own the property as Tenants in Common – allowing for interests to be specified.

Who can witness a Declaration of Trust?

A Declaration of Trust must be signed in the presence of an independent witness to be legally valid. The witness should be an adult who is not a party to the Declaration and has no interest in the property. Typically, a neighbour, colleague, or friend who is not involved in the transaction can act as a witness. The witness should be able to confirm the identity of the signatories and their understanding of the document.

Specialist Declaration of Trust solicitors

In summary, a Declaration of Trust is an essential document for anyone purchasing property with another person in England and Wales. It provides clarity, protection, and peace of mind by clearly outlining the ownership and financial arrangements between co-owners.

If you are considering purchasing property with someone else, it is recommended that you seek legal advice to determine whether a Declaration of Trust is right for you. Holmes & Hills have experience Declaration of Trust solicitors who can advise on and implement an agreement ensuring your best interests are represented.