What is a Declaration of Trust and when do I need one?
What is a Declaration of Trust?
A Declaration of Trust (also known as a Deed of Trust) is one of the most powerful yet misunderstood documents in residential conveyancing. It sets out who owns what in a property and on what terms. It can provide certainty at a time when optimism often outweighs caution.
Here at GA Solicitors in Plymouth, we are on hand to explain when they work best and where their limits lie.
How can a Declaration of Trust protect unmarried couples?
A widespread misconception in England and Wales is that couples who live together acquire rights similar to married couples. They do not. There is no such thing as a ‘common law marriage’ in UK property law.
If an unmarried couple separates, there is almost no automatic legal protection for how the property should be divided, regardless of how long they lived together or whether they have children.
A well-executed Declaration of Trust can act as a vital safety net. It records each person’s financial interest and intentions from the outset, reducing uncertainty, disputes, and legal costs if the relationship breaks down.
Should I create a Declaration of Trust if there are unequal deposits?
Where one partner contributes significantly more to the purchase price, a Declaration of Trust is essential.
For example:
- Partner A contributes £50,000
- Partner B contributes £5,000
A properly drafted declaration can ensure that each partner receives their initial contribution (or proportion thereof) back first if the property is sold, before the remaining equity is divided in agreed proportions. Without this document, the starting assumption can easily lead to unfair results.
Do I need a Declaration of Trust if I have been gifted money for my house deposit?
Many first-time buyers rely on financial help from parents. However, failing to document this support clearly can create serious issues later. A Declaration of Trust can specify that funds gifted to one of the parties are to be received back by that party if the property is sold.
This clarity protects both the buyers and the parents and avoids disputes during a future sale, separation, or remortgage. Without a declaration, money contributed by parents may be treated as part of the general equity of the property. This risks a family contribution being absorbed into an ex-partner’s share.
A Declaration of Trust can ring-fence that contribution, ensuring it is protected from being treated as part of an ex-partner’s 50% entitlement in the event of a relationship breakdown.
This principle extends beyond first-time buyers and can be used to protect any form of family wealth contributed towards a purchase.
Will a Declaration of Trust protect me in a divorce?
A Declaration of Trust is a legally binding contract, and courts will generally uphold it – particularly for unmarried couples.
However, during divorce proceedings, the Family Court has wide discretionary powers. Under the Matrimonial Causes Act 1973, the court can override a Declaration of Trust if doing so is necessary to achieve a ‘fair’ outcome.
Should we buy the property as joint tenants or tenants in common if we want a Declaration of Trust?
There are two ways that a property can be held, either as joint tenants or tenants in common.
- Joint Tenants: equal ownership, automatic survivorship, no defined shares
- Tenants in Common: defined shares (equal or unequal), no survivorship
A Declaration of Trust can only be used where buyers hold the property as Tenants in Common because a Declaration of Trust sets out precise ownership shares.
What should be included in a Declaration of Trust?
A well-drafted declaration should also deal with other scenarios, such as:
- When the property can be sold
- How one party can force a sale
- Valuation mechanisms
- Timeframes for buy-outs
These clauses are crucial in preventing stalemates if relationships deteriorate.
Do I need to tell my mortgage lender I have a Declaration of Trust?
A Declaration of Trust does not usually require lender involvement unless it affects the lender’s security. However, every case is different. In some situations, you may need to notify the mortgage lender or obtain consent. You should seek advice from your solicitor before proceeding.
When should I get a Declaration of Trust?
While it is best to enter into a Declaration of Trust at the time of purchase, one can also be:
- Created later, or
- Updated via a Deed of Variation
This is particularly important where one party later funds major works, such as an extension or makes a large capital payment on the mortgage.
Do I still need a Will if I have a Declaration of Trust?
Tenants in Common do not benefit from survivorship rights. If one owner dies, their share passes under their will or under intestacy rules if no will exists.
Without a will, a deceased owner’s share could pass to distant relatives rather than their partner. A Declaration of Trust should be supported by a properly drafted will.
How can I ensure my Declaration is valid?
For a Declaration of Trust to carry weight, particularly in contested situations, it must:
- Be correctly drafted
- Meet all legal formalities
- Reflect genuine intentions
Courts are more likely to uphold properly executed documents, though they will still prioritise equity and fairness in divorce proceedings.
Overall, Declarations of Trust are far more ‘bulletproof’ for unmarried couples than for married couples, but they remain an essential tool in both contexts.
Next Steps
If you are buying a property, contributing unequal funds, receiving family assistance, or planning for the future, early professional legal advice is crucial.
Contact a member of the GA Solicitors – Residential Conveyancing team to discuss whether a Declaration of Trust or an alternative arrangement is right for you and how best to protect your interests from day one.
You can call our conveyancers in Plymouth on 01752 203500 or email enquiries@GAsolicitors.com. You can also use our online contact form.
All content on this website (inclusive of guides, blogs and imagery) is strictly copyrighted by Gill Akaster LLP, trading as GA Solicitors. It is not to be used by any third party without prior contact and permission. Any requests for content should be sent to katy.mckenna@GAsolicitors.com.