declarations of trust

what is a declaration of trust?

a declaration of trust is a legally binding document entered into by any party with an interest in a property where there is a need to record who owns what share of the property. It effectively tells the story of who contributed what towards the purchase price. This can range from different sums for the deposit to agreements that one party will pay more towards the mortgage meaning they will own a higher percentage of the property overall. It can protect loans from parents or give rights to someone who is not a legal owner, but has contributed in some way to the property (subject to a lender's consent if you have a mortgage on the property)

how might these documents be relevant to you? 

 

with house prices once again on the rise and mortgages with low deposits notoriously difficult to get, buying property frequently now involves gifts from parents or couples contributing different amounts to achieve the minimum deposit. So what happens if you separate? If you put in more than your partner, how is that protected? The simple answer is that unless you have specified in a legally binding document that the property is to be held in different proportions, the default position is 50/50 

a declaration of trust can also be used to set out a change in ownership for a couple who own a rental property where one is a higher rate taxpayer. By changing the ownership of the property to give the lower rate taxpayer more of the rental income, this reduces your income tax liability. We can prepare the document for you and advise you on the process to register this change with HMRC