A deed of trust, also known as a declaration of trust, is a legally binding document which sets out the terms on which a property is held by different parties. It can be held by the owners themselves or by a third party.
When is a deed of trust needed?
A deed of trust acts as evidence of property ownership and is needed for a future transfer or sale to ensure the proceeds are correctly distributed. It also details what should happen to an owner’s share of a property when they die.
According to the Law Society, a trust can be written into a will or set up at any time. A solicitor can guide you through how to set it out and there are many firms such as https://www.parachutelaw.co.uk/deed-of-trust who can offer advice and draw up a deed for you.
A deed of trust essentially avoids any confusion about the proportion of ownership of a property should something happen, such as the breakdown of a relationship. This ensures that all contributions to the cost of the property are legally recorded and all funds are protected.
Joint tenants v tenants in common
If you are tenants in common, it means that you, as owners, have different shares in your property. If one of you dies, that share goes to the beneficiaries of your will, instead of automatically passing to the other owner.
Joint tenants have equal rights to a property, meaning that if one dies, the whole property passes to the surviving tenant. It is important to get legal advice about this before setting up a deed of trust. They are legally binding documents which serve to give property owners protection.
Can a deed of trust be changed?
While it’s not possible to amend a deed of trust, you can alter the terms by taking out a supplementary deed of trust. This refers to what was in the original document and outlines what has changed and what the proportions are now. This could be after renovation works to a property or if someone has contributed more.
