MAKE YOUR FREE Declaration of Trust Beneficial Interest
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What is a Declaration of Trust Beneficial Interest?
Declarations of Trust Beneficial Interest are legal documents used to declare that a property’s legal owners hold the property on trust for themselves and for other people who are not legal owners. This Declaration of Trust Beneficial Interest specifies the beneficial owners’ shares based on their contributions to the purchase price. For more information, read Declaration of trust.
For use in England and Wales only.
When should I use a Declaration of Trust Beneficial Interest?
Use this Declaration of Trust Beneficial Interest:
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to explicitly set out the beneficial ownership of a property (eg a house or a flat) in proportion to parties’ contributions to the purchase price
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when there are one or two legal owners of a property
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when one or two other people (ie the ‘beneficiaries’) are entitled to a beneficial ownership share in the property because they contributed to the purchase price
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whether the beneficiaries will live in the property or not
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when purchasing property with or without a mortgage
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for properties in England and Wales only
Sample Declaration of Trust Beneficial Interest
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THIS DECLARATION OF TRUST is made by:
of , and
of ,
on _______________________________(date).
W H E R E A S :
- By a Transfer of even date with this Deed but executed before this Deed and made between (1) and the (2) the property described in the Schedule (the Property) was transferred to the free from incumbrances.
- The purchase price in the sum of (£) was paid
- It has been agreed by the trustee that shall hold the net proceeds of sale upon trust as follows:-
NOW THIS DEED WITNESSETH as follows:-
The shall hold the net proceeds of sale of the Property upon Trust for the and the
IN WITNESS WHEREOF the trustee the day and year first before written.
THE SCHEDULE (the Property)
ALL THAT leasehold known as , which is registered at H M Land Registry with Title Absolute under Title Number .
| Executed as a deed by | |
| in the presence of: | |
| Witness signature | |
| Name of witness | |
| Address | |
| Occupation | |
| Executed as a deed by | |
| in the presence of: | |
| Witness signature | |
| Name of witness | |
| Address | |
| Occupation | |
About Declarations of Trust with Beneficial Interests
Learn more about making your Declaration of Trust Beneficial Interest
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How to make a Declaration of Trust Beneficial Interest
Making your Declaration of Trust Beneficial Interest online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all the information about the property and its ownership prepared in advance, creating your document is a quick and easy process.
You’ll need the following information:
The owners, the beneficiaries and the seller
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How many legal owners of the property are there?
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What are the legal owners’ names and addresses?
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How many beneficiaries (ie beneficial owners of the property) are there (ie those who are not also legal owners)?
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What are the beneficiaries’ names and addresses?
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What is the name of the party who sold the property to the owners (this may be an individual or a business)?
The property
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What is the property’s address?
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What is the property’s title number on the Title Register at HM Land Registry?
Ownership of the property
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Do the legal owners own a freehold or a leasehold interest in the property?
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What was the total purchase price paid for the property when the owners acquired it?
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Was a mortgage or a loan used to contribute to the purchase price? If so:
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What is the lender’s name (eg the bank’s name)?
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What is the amount of the mortgage or loan?
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Did the owners and beneficiaries under this Declaration of Trust contribute equally or unequally to the purchase price?
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If unequally, what was each party’s contribution as a percentage of the purchase price (ie of the balance after the mortgage or loan has been applied)?
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Common terms in a Declaration of Trust Beneficial Interest
Declarations of Trust Beneficial Interest set out the way in which a property is owned. To do this, this Declaration of Trust Beneficial Interest template includes the following terms and sections:
This Declaration of Trust is made by…
The document starts by clearly identifying the legal owners (ie the ‘trustees’) and the additional beneficial owners (ie the ‘beneficiaries’) of the property. It then provides a space for the parties to insert the date of the document once it is signed.
Whereas:
This section identifies the sale to which the Declaration of Trust applies, by setting out the seller and the method of purchase (eg the price paid and whether a mortgage or loan was used). It states that the property was transferred to the owners ‘free from incumbrances’, meaning there should be no undisclosed third-party rights (eg interests under other trusts).
The owners’ and beneficiaries’ contributions to the purchase price are also specified here.
Finally, this section contains the statement that the parties are making by signing this document: that the trustees (ie the legal owners) declare that they hold the property on trust for themselves and the additional beneficiaries.
Now this deed witnesseth as follows:
This is the core of the Declaration of Trust. It states the shares in which the owners and beneficiaries will receive the proceeds of sale for (ie own) the property. This will either be in equal shares or in specific proportions. If it’s in specific proportions, these will match the proportions in which the parties are stated to have contributed to the purchase price of the property.
In witness whereof…
This sentence precedes the signatures and essentially highlights that the parties are signing the document to confirm its contents.
The Schedule (the property)
The schedule identifies the interest to which the Declaration of Trust relates by stating whether it is a freehold or a leasehold interest and by setting out the property’s address and title number.
Signatures
The signature section provides spaces for all of the owners and beneficiaries to sign and for each party’s witness to sign and provide their details. It explicitly states that the document is executed as a deed. For more information on signing, see the Make it legal checklist.
If you want your Declaration of Trust Beneficial Interest to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review the document for you (or to make the changes for you) to make sure that your modified Declaration of Trust complies with all relevant laws and will be enforceable. Use Rocket Lawyer’s Ask a lawyer service for assistance.
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Legal tips for owners and beneficiaries
Take everything into account
Sometimes the true value of people’s contributions to the purchase and value of a property is a simple mirror of the financial contributions the parties made to the purchase price. Factors such as contributions to bills and mortgage payments, renovations, the parties’ intentions, and contributions to running a household may all weigh in to differing extents. When making a Declaration of Trust, make sure that the beneficial ownership shares you’re specifying accurately represent what the parties believe beneficial ownership of the property should be in the circumstances. If you want help making a more tailored Declaration, you can Ask a lawyer for help.
Understand when to seek advice from a lawyer
In some circumstances, it’s good practice to Ask a lawyer for advice to ensure that you’re complying with the law and that you are well protected from risks. You should consider asking for advice if:
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the beneficiaries are intending to live at the property and there is a mortgage. They will not be protected if the property owner fails to pay the mortgage and the property is repossessed
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you need help having this deed noted on the Register at the Land Registry
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you want to include more details in your Declaration of Trust (eg setting out how mortgage repayments will be shared or what will happen if an owner wants to leave)
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you want to specify ownership shares in different proportions to purchase price contributions
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Declaration of Trust Beneficial Interest FAQs
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What is included in a Declaration of Trust Beneficial Interest?
This Declaration of Trust Beneficial Interest template covers:
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identifying the owners and beneficiaries
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the property
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the type of interest held in the property
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the property’s purchase price
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contributions to the purchase price
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mortgages and loans
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Why do I need a Declaration of Trust Beneficial Interest?
If you’re involved in a property purchase with anybody who is not registered as a legal owner of the property, you should make sure to clearly establish and record each party’s true shares in the property’s ownership. You can do this using a Declaration of Trust Beneficial Interest, which is a formal legal document that’s intended to be legally binding, so long as it is created correctly and fairly.
Declarations of Trust Beneficial Interest are appropriate when somebody who has contributed to the purchase price of a property is to have a share of its ownership rather than a charge over it (ie they’re not acting as a lender). For example, if somebody purchases a house in their own name but their parents make a contribution to the purchase price.
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What is a beneficial interest?
Beneficial interest in a property refers to someone’s right to enjoy the economic benefits and use of a property. Someone can have a beneficial interest in a property even if they’re not named as a legal owner of the property.
A beneficial interest in property often arises in situations where multiple parties contribute towards the purchasing price of a property. For example, where parents make a financial contribution towards their child’s home, to help them buy it (eg by providing a deposit).
For more information, read Legal interest and beneficial interest in property.
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How do Declarations of Trust work?
Declarations of Trust rely on a variety of established legal concepts. No in-depth legal understanding is required to make a Declaration of Trust Beneficial Interest, but understanding some of the key terms and ideas involved can be helpful.
Declarations of Trust set out how the beneficial (or equitable) ownership of a property will be shared. The beneficial owner (or ‘real’ owner) of something is the person who receives the benefits of owning it (eg rights to use it and to receive interest payments accumulated by it), regardless of whether they are listed as the thing’s legal owner or not. The legal owner is the person who holds the legal title to something (eg they’re listed as the legal owner at the Land Registry and/or on a property’s title deeds). If somebody has a beneficial interest in something, the thing’s legal owner will hold that thing ‘on trust’ for the beneficial owner. This means that they hold and must manage the property for the benefit of the beneficial owner. The legal and beneficial owner of something can be the same or a different person (or people).
If multiple people purchase real property together (eg a house) and are registered as the owners, they will always own the legal interest as ‘joint tenants’. This means that they will always own the legal interest jointly (ie all together) and equally. The beneficial interest, however, can be held as joint tenants or as ‘tenants in common’. Tenants in common hold property in distinct shares, which can be equal or unequal. People who are not legal owners of a property may be beneficial owners of it. If you create a Declaration of Trust Beneficial Interest using this template, the owners and additional beneficiaries (ie non-legal owners) listed will all own part of the beneficial interest in the property as tenants in common. You can specify the shares in which they own it, in proportion to their contributions to the purchase price.
Note that the use of the word ‘tenant’ here has nothing to do with tenancy agreements or leases. Joint tenants and tenants in common can be the owners of a freehold property (ie when there is no tenancy/lease).
Whether a property is held as joint tenants or tenants in common also has implications for how ownership is passed on when a tenant dies.
For more information, read Co-ownership of property and Declaration of trust.
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Do I need to register this Declaration of Trust?
Once the Declaration of Trust Beneficial Interest is complete, it should be registered at the Land Registry. This is not compulsory but it is recommended to provide evidence of the true (ie beneficial) ownership of the property.
The Declaration of Trust Beneficial Interest can be registered by completing Form TR1, including the Declaration of Trust panel (during a house purchase), or Form JO (to be used in the absence of a transfer or lease). Completed forms should be sent to the Land Registry.
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Are Declarations of Trust Beneficial Interest legally binding?
Provided they are executed (ie signed) correctly, Declarations of Trust Beneficial Interest are legally binding and enforceable. Make sure to follow the Declaration of Trust Beneficial Interest checklist to ensure your document is legally binding.
Note that in certain situations a Declaration of Trust Beneficial Interest may be overturned by the courts (eg in divorce proceedings when dividing financial assets). Ask a lawyer if you have any questions or concerns about this.
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