Conveying Property to Trusts

CONVEYING PROPERTY TO TRUSTS.

As part of our estate planning we often recommend that property is transferred to a trust. Most commonly:

·  For a single person – we recommend that 50% of the property is transferred into a trust in lifetime. A conveyance will be needed to achieve this.

·  For couples – we may recommend that they own the property jointly as tenants in common and then direct each parties share of the property into a trust on their death.

If one partner owns the property in their sole name a conveyance may be needed to transfer the property to joint names. If they are already joint owners a conveyance is not needed until one of the parties dies.

Please note that we do recommend trusts for other situations but the mechanics of transferring to trust will be the same.

The Trusts that we set up initially for a client are ‘pilot trusts’– the initial Deed sets up the trust and sets out who are Beneficiaries and who are Trustees and the powers of the Trustees and to open and activate the trust they are set up with a sum of £10. At this initial stage the only property put in to the trust is this initial £10. The idea is that other property and assets can be put in at a later date.

If we recommend placing a property into the trust the legal formalities must be carried out to show that the property is held by the trust. The work done at the Land Registry does NOT place the property into trust it is the declaration of Trust by the client that forms the Trust – the land registry work is simply dealing with the formalities of the trust.

A Trust of Land MUST be evidenced in writing – this is a fundamental principle of English Law.

When we set up a Trust of Land the written declaration of trust is contained within the TR1 Transfer Deed that goes to the Land Registry. This document transfers the property from the current owner to the current owner and trustees of the trust.

Paragraph 10 of each TR1 Form contains the formal written declaration of trust. There are three options to indicate how the property is held:

We always select option 3 as this contains space to set out in detail how the property is held. We will specify:

‘ They are to hold the property on trust in the following terms:

·  50% of the property is held by Mr A absolutely

·  50% of the property is held by the Trustees of the Mr A Family Probate Trust in the terms of a Deed dated 1st January 2010

This confirms that the property is held partly by the owner absolutely i.e. not in trust and partly by the trustees of the trust and refers back to the original pilot trust deed as the governing document for the terms of the trust.

The original TR1 Deed is placed with the Pilot Trust deed as evidence that the property is held in trust.

Please note that if the client is not having us store their documents we send the original TR1 back to the client and instruct them to keep it safely with their Trust Documents.