A Declaration of Trust, also known as a Deed of Trust, is a legal document that outlines the ownership and distribution of assets between two or more parties. Alongside companies and partnerships, trusts are a common way for multiple individuals to jointly own assets.

What is a Declaration of Trust?

A Declaration of Trust is a legal document that sets out the rights and responsibilities of each party, and how the asset will be managed. It can also specify rules for the use of a property, how to divide profits or losses when the asset is sold, and how to proceed in certain situations, such as the death of one of the property owners.

There are several types of trust acknowledged by HMRC. These differ in the specifics of how control of the trust is passed on, and how any income is divided. Knowing how HMRC labels your trust is important for making sure you pay the correct rate of tax on any income from the trust.

What is a Declaration of Trust?

A Declaration of Trust is essential for anyone who jointly owns property or assets with another person. There are several reasons why multiple parties would want to invest in / jointly own a property or asset. These include unmarried couples, investment partners, and family members who help make payments but whose names are not on the mortgage.

Without a Declaration of Trust, there is no clear legal agreement in place to determine how the property will be managed or how money will be repaid. This can lead to disputes and misunderstandings in the future, which can be costly and time-consuming to resolve.

A Declaration of Trust provides clarity and peace of mind for all parties involved, ensuring that everyone understands their rights and responsibilities.

What should be included in a Declaration of Trust?

A Declaration of Trust should include the names and contact information of all parties involved, a description of the property or assets being managed, and the terms of the agreement. These will depend on the individual situation, but often include:

  • How much money each person has contributed towards the property purchase and other costs, such as maintenance and mortgage repayments.


  • How and when each person will get their money back.


  • What will happen to each person’s financial contribution if the current relationship breaks down.


  • What will happen to each person’s financial contribution if the homeowner fails to keep up with mortgage repayments.


  • What will happen to each person’s financial contribution if the homeowner sells the property and buys another.


  • Outline any restrictions or conditions on the use of the property or assets.

How do you create a Declaration of Trust?

Creating a Declaration of Trust is a relatively straightforward process. The first step is to decide on the terms of the agreement, including how the property or assets will be managed and how any profits or losses will be shared. Once you have agreed on the terms, you will need to draft the document and have it signed by all parties involved.


It is important to seek legal advice when creating a Declaration of Trust to ensure that it is legally binding and enforceable. We at CIGMA Accounting are always ready to assist you, no matter where you are in the UK.

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