Declarations of trust for jointly owned property

by Practical Law Property

A practice note that considers the key legal issues arising from a declaration of trust, particularly for co-owners holding property as tenants in common. This practice note outlines the formalities required to create a valid trust of land under the Law of Property Act 1925 (LPA 1925), including the three certainties and the need for written evidence. It discusses registration requirements at the Land Registry, such as the use of Form A and Form B restrictions to protect beneficial interests and alert third parties to the trust's existence. Guidance is also provided on potential registration obligations with HMRC's Trust Registration Service (TRS). Furthermore, this practice note examines the tax implications for co-owners, including for Income Tax, Capital Gains Tax (CGT), Inheritance Tax (IHT), and Stamp Duty Land Tax (SDLT). It also addresses how to handle existing mortgages and the powers of trustees under the Trusts of Land and Appointment of Trustees Act 1996 (TLATA 1996). Key negotiating and drafting considerations are explored, such as defining beneficial interests through fixed or floating shares and limiting trustee powers to avoid future disputes.