30 Dec Can you write your own declaration of trust?
There is nothing to stop you from writing your own declaration of trust for your property, but whether this is a good idea is a different matter.
First of all, it is important that you understand what a declaration of trust is used for. This is a legal document that sets out the terms upon which an asset, such as property, is held. It will include the proportion of ownership of the property and explain any other terms the parties have agreed on. The owners will normally hold the property on trust as beneficial owners.
Legally binding document
Since the property is likely to form a significant part of the assets someone holds, it is vital that the document is legally binding. If you create the declaration of trust yourself, there is a chance it may not be recognised by a court in the future if any dispute arises. This is why it is often advisable to ask a conveyancing solicitor to draw one up.
If you do not have a legal representative, you will find plenty of reliable information on firms such as Parachute Law online.
In certain circumstances, you may wish to make it clear that one of the beneficiaries of a trust has no financial interest in the property. This involves a declaration of no interest in the property and may involve the severance of a previous declaration of trust, such as when a couple divorce. This will involve entering a Form A restriction on severance of a joint tenancy where one exists.
Other matters to consider
There are several other combinations of circumstances that make a declaration of no interest in property appropriate, such as when a partner is moving into a property solely owned by the other party, when there are stamp duty considerations, and when there is a joint mortgage sole proprietor such as when parents are helping a child buy a property.
If you still want to create a declaration of trust yourself, the key elements it should contain include:
– How much each party contributed to the deposit and the associated costs of any purchase.
– The share held by each party.
– How much each party is expected to pay towards the mortgage, bills, utilities, and council tax.
– Whether either party expects to recover any extra contribution in the future. This may include funds contributed by a third party, such as one of the beneficiary’s parents.
If you are buying a property with someone else as either tenants in common or joint tenants, you should consider a declaration of trust. It is also a good idea if one or more of the buyers are receiving help from a third party, such as a friend or family member. These financial arrangements can be crucial when it comes to the future sale of the property.
Always remember that a declaration of trust is between the parties to the document. Your obligations to the mortgage provider are joint and are unaffected by the share of the property you own.
As you can see, there is a lot to think about when it comes to a declaration of trust. Unless you can be 100 percent certain that you have covered all bases, it is always best to seek legal advice.