A Declaration of Trust is important if you are buying a property jointly with another person/people, or if an individual is contributing financially to someone else’s property (e.g. helping with a deposit or renovation costs). Such arrangements can arise in many situations, such as between cohabitants, family members, friends or business acquaintances.
Without a Declaration of Trust to record the agreement between you about the property, disputes can arise at a later stage and resolving the situation can be costly and time consuming. As a result, it is always advisable to agree and document the intentions at the outset as people’s motivations for co-owning, co-investing or sharing in properties can differ significantly.
When is a Declaration of Trust used?
- Family arrangements: many people enter into Declarations of Trust when buying a home with another person or if they are helping someone to buy a property. This can be between couples, friends or family members. Property and cohabitation agreements are very flexible and they can record not only the intended ownership of the property but other matters as well, such as who will pay the mortgage and utility bills, who is able to live at the property and what would happen if one person moves out or wants the property to be sold.
Our family team can assist in these circumstances. You should also consider seeking advice if you’re planning to marry, form a civil partnership or have children as such events can alter the effect of agreements about property.
- Buying a property: a Declaration of Trust can be prepared alongside the purchase of a property to record the basic terms of ownership. Our conveyancing team can help you if you are thinking of buying a house, including considering whether a Declaration of Trust is necessary.
- Wealth and tax planning: for some people, investing in property or helping someone to buy a property is part of their wider tax and wealth planning. Declarations of Trusts as well as Wills can record what should happen in the event of a person’s death, disability or incapacity and ensure that their finances are dealt with in accordance with their wishes. Our estate planning team can assist in relation to this.
- Commercial agreements: in circumstances where people are investing in property in the context of a business relationship, consideration should be given to whether a formal agreement is needed in relation to the ownership of the property. This could be by way of a Declaration of Trust or an alternative such as a Loan Agreement. Consideration should be given to factors such as whether the arrangement should be linked to or have security over the property, and whether interest should accrue. This is commonly thought of as a more commercial lending arrangement but can also be used in a variety of family or investment circumstances. Our commercial specialists can help.
Why choose Russell-Cooke?
Russell-Cooke has a wide variety of in-depth expertise and this enables each of our teams to liaise with colleagues in other areas of law to consider the different aspects of any such agreement and ensure that the best approach is taken for your circumstances.