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Deed Of Trust

GUIDE TO A DECLARATION OF TRUST: PROTECTING YOUR PROPERTY INVESTMENT

When it comes to shared property ownership, investing in a Declaration of Trust can provide essential clarity and protection for all parties involved. Whether you’re an unmarried couple, contributing different amounts to the property purchase, or receiving financial support from a family member for the deposit, a Declaration of Trust is a valuable tool to define ownership shares and safeguard your investment.

Who should consider a Declaration of Trust? If you’re purchasing a property with someone else, moving into a property owned by someone else, or contributing to a property purchase that won’t be in your name, it’s important to consider a Declaration of Trust. This legal document records your agreement on how the sale proceeds will be divided when you decide to sell the property. It covers various aspects, such as:

  • The deposit amounts each party has contributed to the purchase price
  • Individual contributions to legal costs, stamp duty, and removal expenses
  • The specific share of the property each person will own
  • The percentage of the mortgage responsibility for each party
  • The arrangement for property-related expenses
  • Mechanisms for buying out the other party’s share if necessary

Why is protecting your investment crucial? Without a Declaration of Trust, potential issues can arise in scenarios such as relationship breakdowns, sale intentions, or even in the event of death. Without a clear agreement, a court may order an equal division of the sale proceeds, which can be unfair if unequal contributions were made towards the property purchase or significant funds were invested in home improvements.

When should you set up a Declaration of Trust? If you’re buying a property with someone else, you need to decide whether you’ll hold the property as Tenants in Common or Joint Tenants. Consult with a conveyancing lawyer to determine the most suitable option for your situation. Typically, if you choose Tenants in Common, a Declaration of Trust is usually required to support this type of ownership.

Ideally, it’s best to establish a Declaration of Trust at the time of property purchase to ensure clarity from the outset. However, it can be set up at any time, as long as all parties involved are in agreement. This flexibility allows for situations where one person funds significant repairs or pays off a lump sum on the mortgage.

Seeking further advice Creating a Declaration of Trust often goes hand-in-hand with establishing a Will to provide comprehensive protection. For instance, you might include the property shares in the Declaration of Trust and make provisions in the Will for the surviving party to use the property for their lifetime. It’s also an opportune time to review your financial circumstances, any existing tax planning, and consider creating a Lasting Power of Attorney.

How we can assist Our team of experienced lawyers is available to provide expert guidance on the decisions and considerations involved in setting up a Declaration of Trust. It’s important to note that, due to potential conflicts of interest, we can usually only act for one party involved in the Declaration of Trust. However, we are committed to ensuring that your interests are protected and that the process is handled with utmost professionalism and care.