When Should I Consider Getting a Declaration of Trust?

INTRODUCTION

Before addressing this question, we urge you to consult another essential article in our resources section, "What is a Declaration of Trust?"

In that article, we focus more on the contents of a Declaration of Trust as an important legal document for safeguarding property rights under different ownership arrangements. It also lays out precisely what each individual's shareholding and rights are in a cohabitation agreement between friends, family, or co-workers.

However, understanding when to put a Declaration of Trust in place is just as important as understanding its contents. If you're purchasing property or your circumstances change, it becomes a powerful tool in protecting your property rights and interests.

This article looks specifically at when such a declaration should be considered.

IDEAL TIMING: BEFORE PURCHASING A PROPERTY

The best time to have a Declaration of Trust is prior to completing your property purchase.

By ensuring that all parties involved agree on, sign, and date it at the time of completion, this crucial preventive measure helps to avoid potential future disputes or misunderstandings and protects everyone's interests from the start.

CAN I CHANGE THE DECLARATION OF TRUST POST-PURCHASE?

Yes. However, while setting up a Declaration of Trust after a property purchase is still possible, it comes with challenges.

Once you've completed the purchase, parties are not legally obliged to agree to a new declaration, making it more challenging to implement after the fact, mainly if disagreements or relationship changes occur.

CAN I UPDATE THE DECLARATION OF TRUST TO REFLECT CHANGES IN CIRCUMSTANCES?

Yes. Everybody's circumstances change, and a Declaration of Trust is designed to be flexible so that it can be adapted accordingly. For example, parties may find their contributions to the property fluctuate, so the property shareholders may wish to change their shareholding to reflect this.

The Declaration of Trust can then reflect all contributions made by each shareholder since the property was purchased. Similarly, the shareholders may desire to change the distribution of rental income each shareholder receives and have this reflected in the document.

However, as outlined in our main article, a Declaration of Trust can only be amended when all parties agree – irrespective of whether it's a minor adjustment or a complete rewrite to include more significant changes.

WHAT HAPPENS WHEN A COHABITING COUPLE DECIDES TO MARRY?

As discussed in the main article, it's crucial to understand how marriage alters the legal standing of a Declaration of Trust.

Under the Matrimonial Causes Act 1973, the court may not be bound by the declaration in divorce proceedings. Therefore, transitioning to a prenuptial or postnuptial agreement might be advisable for married couples.

Need to know more about Declarations of Trust?

Given the complexities involved in such documents, it's highly recommended that you seek professional advice when drafting or amending a Declaration of Trust.

Our team is on standby to provide personalised guidance and ensure that your specific needs and circumstances are adequately addressed.

Simply book a callback and we'd be happy to discuss the options with you. 

Alternatively, call us on 01233 659 796.

Or contact us here.