What Is a Declaration of Trust?

Updated September 29, 2023
11 min read
What Is a Declaration of Trust?


A declaration of trust property can seem like a mouthful of legal jargon, but it’s really just a handy tool that comes into play in situations of shared asset ownership. Fundamentally, it’s a legal document that outlines the specifics of property owned jointly by two or more entities.

Put simply, a declaration of trust property plays the role of a guiding star, giving direction and providing clarity in the universe of shared property ownership. We invite you to delve deeper into the subsequent parts of the article to unravel the intricacies of a declaration of trust property. With every paragraph, you'll equip yourself with actionable insights that make a real difference in your financial and estate planning journey.

Understanding a Declaration of Trust

A declaration of trust property is a critical legal document in the world of property ownership. It outlines the specific shares of multiple owners in a singular property. It is like an official record that distinctly maps out ownership stakes and establishes clear boundaries, thereby preventing potential disagreements among the co-owners.

Moreover, a declaration of trust property goes beyond simply deciding who owns what. It sheds light on how the costs linked to the property will be divided, elucidates the rights of everyone involved, and outlines under what circumstances the property can be sold. Thus, acting as a comprehensive guide, it keeps disputes at bay and smooths the path for peaceful co-ownership.

Why Is a Declaration of Trust Important?

A declaration of trust property is an essential tool for managing joint land or property ownership. It serves as a structured framework that outlines the owners' proportional rights, contributions, and obligations. This importance is amplified when co-owners have made unequal contributions to the purchase price, as it dictates who gets what share.

Furthermore, a declaration of trust property not only safeguards financial interests but offers protection in unforeseen circumstances. For example, if a disagreement arises between the co-owners or if a co-owner passes away, the document provides a legal foundation that facilitates resolution. Hence, it is a powerful instrument that promotes transparency and minimizes potential discord in property co-ownership.

When To Use the Declaration of Trust

Knowing when to use a declaration of trust property is as essential as understanding what it is. It applies to various scenarios where shared ownership is present. The key is identifying the appropriate situations and utilizing this legal document effectively.

Typically, a declaration of trust property should be used:

  • When buying a house with a spouse or partner, particularly if each party contributes different amounts to the purchase.

  • When parents provide financial assistance for their child's property purchase, protect their investment.

  • When a group of people co-own a property, such as a vacation home or investment property, they lay out clear guidelines for managing the property.

  • When a property is held in one person's name but is indeed owned by more than one person, it legitimizes the arrangement.

Declaration of trust example, in the U.S., unmarried couples buying a property together can use the trust property to outline their respective shares. It saves them potential trouble in the event of a partnership dissolution or one partner's death.

To know more about the details of when and how to use a declaration of trust property or understand U.S. laws around it, do visit Lawrina for detailed information. Expertise in such knowledge goes a long way in secure and mindful property co-ownership.

What Components Comprise a Declaration of Trust?

Drafting a declaration of trust property is akin to piecing together a jigsaw puzzle. Each piece, or element, plays a crucial role in forming the complete picture.

Here are some of the key elements that make up a declaration of trust property:

  1. Settlors/trustors: These are the original owners who transfer part or full ownership of the property. They are essential characters in the trust story.

  2. Trustees: These are the people appointed to manage the property on behalf of the beneficiaries. They carry the responsibility of adhering to the trust's terms and protecting the beneficiaries' interests.

  3. Beneficiaries: The people who will benefit from the property held in trust. They are the ones intended to profit from the trust arrangement.

  4. Trust property: This is the actual property under trust. It could be residential real estate, commercial property, or land. The precise details of the property need to be clearly outlined.

  5. Terms of the trust: These include the rules on how the trust should be managed, how the benefits should be distributed among the beneficiaries, and other operational stipulations.

  6. Signature of parties: Like the cherry on top of a sundae, the signature of all parties involved seals the deal. Without them, the trust isn't legitimate.

Once all the pieces fall into place, the declaration of trust property stands completed. If the property under trust has a mortgage and is repaid fully during the period, a deed of reconveyance is often involved to transfer the title back to the borrower.

Each element of the declaration of trust must be carefully defined to ensure its strength and efficacy. By understanding these elements, you can ensure that your declaration of trust property accurately reflects your conditions and intent.

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Living in a world characterized by uncertainties, it is imperative to have foresight and take measures to shield our possessions. A declaration of trust property, while it may initially come across as a complex piece of legal terminology, is actually a powerful tool for managing assets. Its chief utility lies in its function to guarantee transparency and equity in co-ownership scenarios. By defining clear ownership stakes and setting out explicit guidelines for handling the property, it serves as a guiding document for co-owners, promoting harmonious property management.

The value of a declaration of trust property goes beyond mere conflict resolution. It is instrumental in preserving the rights and interests of property owners. By setting incontrovertible terms and conditions for the co-owned property, this legal instrument not only safeguards each party’s financial input but also validates their entitlement to their respective shares. 

Frequently Asked Questions

How to choose trustees for a declaration of trust property?

The selection of trustees for a declaration of trust property is a crucial step. Trustees are required to manage the property in the best interest of the beneficiaries, adhere strictly to the trust's terms, and act impartially towards all beneficiaries, amongst other duties.


Trustees can be individuals who are trusted by the settlor, or they could be professional trustees like law firms or trust companies. Regardless of who you choose, it's essential to ensure they understand their obligations and are willing to perform their duties as per the terms of the declaration of trust property.


What happens if a co-owner dies? Does the declaration of trust property still apply?

In the event of a co-owner's death, a declaration of trust property remains effective. The deceased's share of the property is typically passed on to their estate or inherited by a successor, as determined by their will or by law if no will exists.


It's paramount to note that a detailed declaration of trust property could incorporate contingencies for this situation, outlining what happens to a co-owner's interest in the event of their death. Planning ahead in this way provides certainty and prevents potential disagreements or legal issues down the line.


How can I get a mortgage on a property with a declaration of trust property?

Acquiring a mortgage on a property with a declaration of trust property can be a slightly more complicated process, as it involves more than one party. The primary factor that determines this process is the way the trust deed is written. Some banks and lenders accept a declaration of trust property and allow mortgage applications based on it, while others may not.


The key lies in approaching a lender that is comfortable with this type of arrangement and candidly discussing your situation with them. However, it's advisable not to navigate these complexities without professional guidance.