A Declaration of Trust is a document setting out for whose benefit property or other assets are held. Examples include where unmarried couples who own a home together and want to set out the share each of them holds or where a property is held in trust for children under 18 who cannot legally be named as owners.
A Declaration of Trust is a legally binding document. With regards to property it can include details of each party’s share, who pays any costs and mortgage payments, requirements for upkeep, what would happen in the event of a sale, what would happen in a negative equity situation and whether one party could buy the other out.
Once a Declaration of Trust has been signed it usually remains in force until the property to which it refers is disposed of. It cannot be amended unless it contains specific permission for this to be done. If all parties to the declaration agree, the trust can be revoked or re-written.
A Declaration of Trust is a deed and as such must be signed by all trustees and beneficiaries. Each of their signatures needs to be witnessed by an independent witness aged 18 or over and unconnected to the signing parties. The witnesses should also sign and add their name, address and occupation.
A Declaration of Trust cannot normally be overturned. Occasionally if the parties have both acted as though the property was held differently it might be possible to convince a court to overrule a Declaration of Trust but this is a difficult route. It is safer to ensure that the deed accurately sets out the parties’ intentions from the start.
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