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HMRC internal manual

Trusts, Settlements and Estates Manual

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

Although there is no legal requirement for a declaration of trust to be made by deed even where more complex trusts are created, in practice such trusts are usually created by deed. In a trust or settlement deed, rather than the legal owner declaring that s/he holds the beneficial interest for someone else, s/he may appoint trustees of the property, and set out the trusts on which it is held in the trust deed.

In this scenario, the legal owner will also need to transfer the legal title in the property to the trustees by whatever means is appropriate for the particular property. For example if the trust relates to land, the legal owner will need to complete a land registry transfer to the trustees.

A document is not a deed unless it makes clear on its face that it is intended to be a deed by the person making it, whether by describing itself as a deed or expressing itself to be executed or signed as a deed.

A deed will be valid only if it signed by the parties to it. The parties are the settlor and the trustee/s. A deed must be signed in the presence of a witness who ‘attests’ (affirms) the signature(s). A deed no longer requires sealing - Law of Property (Miscellaneous Provisions) Act 1989).

A trust declared under deed is effective only from the date the deed is delivered to the trustees, because without the deed the trustees have no way of administering the trust until they know of its terms. Similarly trustees cannot carry out their duties as trustees until they have control of the property.

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