Declarations of Trust
If you own property with somebody, there are two ways in which you can own it; joint tenants or tenants in common.
Joint tenants own the property together as a whole. In the event of a co-owner dying, the property passes automatically to the surviving co-owner regardless of the terms of their Will. This is known as the Right of Survivorship.
Tenants in Common each own a separate, distinct share in the property, which can either be in equal shares or a defined percentage. Here, in the event of a co-owner dying, their share of the property will pass in accordance with the terms of their Will or, if there is no Will, in accordance with the rules of intestacy.
With tenants in common, a declaration of trust should be considered as it will document how and in what shares the property is owned. For example if somebody has contributed a larger portion of the deposit, the declaration of trust can reflect that they own a higher percentage share of the property.
It can also set out an agreement as to who is to be responsible for payment of outgoings and the mortgage.
A declaration of trust can also be useful where a third party is contributing towards the purchase of a property by way of a loan rather than a gift but is not to be named on the title.
Declarations of trust can save costly disputes between co-owners but if you do enter into a declaration of trust it is important to ensure that your Will is up to date as your share in the property will pass under your Will.