Essentially, the answer is yes, a Deed of Trust is the same as a Declaration of Trust. The two terms are used interchangeably by solicitors, so you may come across both terms when discussing this kind of legal document. In this blog post, we will go through what both terms mean, what situations might require one to be put in place and what needs to be considered before you make a Deed of Trust.
What is the meaning of the Declaration or Deed of Trust?
A Declaration of Trust usually refers to the statement that is made that assets or property are to be held in trust for one or more beneficiaries. The Deed of Trust usually refers to the actual legal document that contains the initial declaration but also contains the details of how any assets are to be dealt with.
If the asset refers to a property, the Deed of Trust may contain information such as how the property is to be used, if there are trustees for the property, if there is rental income, how it should be used and what will happen when the property is sold. Legal specialists such as https://www.samconveyancing.co.uk/news/conveyancing/deed-of-trust-4378 can offer you advice about putting a Deed of Trust in place.
Why should you put a Deed of Trust in place?
A property may only have four owners at one time, but a Deed of Trust can bypass this and add more owners. Also, if you are buying a house with two or more people, you can be called ‘tenants in common’ rather than joint owners. If you all have a different stake in the deposit, mortgage or level of ownership, this can be declared in a Deed of Trust. This is most helpful when it comes to the property being sold as it prevents disputes about how to divide up any assets.
Usually, the ownership of a property must be declared at the Land Registry.. However, if a Deed of Trust is put in place, this can bypass the registry and be used to keep the financing of a property private.
What needs to be considered before you make a Deed of Trust?
The first thing you need to consider is whether the Deed of Trust will benefit all the parties involved. Then, you will need to decide how much of the property each person owns, as this will determine what proportions will be paid out when the property is sold. It is important to remember that if the house is sold for less than it was purchased for, the trustees may not get back all the funds they put in.
