Trusts come in many different forms but are usually used to protect the interests of someone who is not getting an immediate outright benefit.
For instance, a life interest trust inserted into a will made on a second marriage can protect the interests of the surviving spouse and the interests of children from both the former marriages. A disabled person’s trust can protect the interest of a child or adult who suffers from a physical or mental disability.
Trusts may be used to help reduce inheritance tax liability. They can also restrict the age at which beneficiaries obtain an outright interest, although care needs to be taken in balancing those benefits against possible tax disadvantages. We can advise you on what form of trust, if any, is suitable for your needs.
Declarations of trust usually relate to the purchase of freehold or leasehold property. If the property is bought in one person’s name, the declaration will protect another person who has contributed towards the purchase and may want to recoup that contribution on sale. If the property is bought in more than one name, the declaration will set out the division of any net proceeds of sale between the parties - usually in unequal shares. Both declarations will appear on the relevant land registry entries to let a purchaser know that the arrangement exists.
Declarations of trust are essential where an unmarried couple buy a property together but are contributing to the purchase price in unequal shares.