What is a Declaration of Trust?
A Declaration of Trust, also known as a Deed of Trust, is a legally binding document that outlines the financial arrangements between joint owners of a property or those who have a share in a property. It details the division of profits and liabilities, and it can also specify what happens to the property if one owner dies or wants to move out.
Duration of a Declaration of Trust
Generally, a Declaration of Trust remains valid indefinitely, until the property is sold, or until the terms within the Declaration are fulfilled. However, the duration can be influenced by various factors, which we will discuss below.
Factors that Influence the Duration of a Declaration of Trust
- Terms within the Declaration: The Declaration of Trust may contain specific conditions or terms that influence its duration. For instance, it may state that the agreement is valid until the property is sold.
- Change in circumstances: Changes in the personal circumstances of the trustees can influence the duration of the Declaration. For example, if a trustee becomes bankrupt or dies, the Declaration may need to be revised or may even become invalid.
- Legal disputes: If there are legal disputes between the trustees, this may result in the Declaration being revised or terminated.
Termination of a Declaration of Trust
A Declaration of Trust can be terminated if all the trustees agree to this. They will need to create a new legal document, known as a Deed of Revocation, to officially end the Declaration of Trust. Alternatively, the Declaration of Trust can be terminated if the terms within the declaration are fulfilled. For instance, if the property is sold and the profits are divided as outlined in the Declaration.
Tax Implications of a Declaration of Trust
A Declaration of Trust can have various tax implications. These can include liability for Capital Gains Tax, Inheritance Tax, and Stamp Duty Land Tax. It is crucial to seek professional advice when creating a Declaration of Trust to ensure that you understand the potential tax implications.
For more information about the tax implications of a Declaration of Trust, you can visit the HMRC’s webpage on property rentals.
Conclusion
In conclusion, the duration of a Declaration of Trust can vary depending on several factors, including the terms within the Declaration, changes in the trustees’ personal circumstances, and any legal disputes between trustees. It is crucial to seek professional advice when creating a Declaration of Trust to ensure that it meets your specific needs and circumstances.
