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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Ownership and income tax: express trusts - written declaration

A trust must have three certainties. They are certainty of

  • words (intention to create a trust)
  • subject (the property and beneficial interest/s in the property)
  • object (the person/s having the beneficial interest/s).

A declaration of trust must be made in such a way that the words make clear what the settlor intends, and identifies with certainty the property and the interest/s in it.

A simple declaration is enough evidence that a bare trust exists.

Example - written declaration of bare trust

“I John Smith declare that I hold the property described as XXXXX for my son David Smith absolutely”

or

‘I John Smith declare that I hold the property described as XXXXX on trust for my son David Smith’

The declaration is signed by John Smith and dated. There is no need for the beneficiary even to be aware of the declaration of trust, so David’s signature is not required.

There is no ambiguity in the use of ‘declare’. Either of the above declarations means that John holds the property as trustee for David. David has the beneficial interest in the property and is entitled to the property and any income derived from it.

This is a bare trust. The use of the word ‘absolutely’ in the first example means that there are no conditions attached. A declaration does not have to say ‘absolutely’ - if nothing is said after ‘David Smith’ as in the second example, then ‘absolutely’ is implicit.

So long as there are no conditions, you can usually accept a declaration in the above form as being effective as a bare trust from the date it is signed. An example of a condition might be that David is required to attain the age of 25 before he becomes entitled to his interest in the property. If there are any conditions present, this is not a bare trust. If the taxpayer making the declaration does not accept this, you should refer the case to HMRC Trusts & Estates Technical Edinburgh for advice.

There is nothing in the above declarations to indicate that either is a deed (TSEM9530).

A declaration of trust is usually a statement by the legal owner of property that s/he holds the beneficial interest for someone else. S/he is not transferring the legal title. (See by contrast TSEM9530.) The beneficiary has an equitable interest created by the declaration which can be enforced by the courts. The donor/trustee does not need to register the trust with the Land Registry, nor does the document require delivery or a witness to signatures.

The trust will become enforceable from the date the declaration is executed, but such a document on its own does not prove that the trust existed prior to its execution. Evidence would need to be provided to show that the trust did exist before the declaration of trust was made in writing.

If you need further advice on the validity of a document claimed to be a declaration of trust, contact HMRC Trusts & Estates Technical Edinburgh.