About the Declaration of Trust (before you buy)

Declaration of Trust
You build a Declaration of Trust if you are about to acquire an asset. (If you already own the asset then, instead, build an Acknowledgement of Trust.)

Self Managed Superannuation – the Australian Tax Office may require you to have a Declaration of Trust to say that the Trustees hold the property in trust for the Self Managed Super Fund. Start building the document and read the hints on this topic.

If you already own the asset (say, for your Super Fund) then build an Acknowledgement of Trust. If you are about to buy the asset then use this Declaration of Trust.

What is a Declaration of Trust?
A ‘trust’ is merely when someone holds 'something' for you on trust. The ‘something’ may be property, shares or any other asset. Usually when you have an asset you have both the ‘legal’ and ‘beneficial’ interest. However, with a trust someone has the ‘legal’ ownership. Another person or group has the ‘beneficial’ interest.

A Declaration of Trust (sometimes called a Bare Trust) is one of the many types of trusts available in Australia. A Declaration of Trust clearly shows who is the legal owner (trustee) and who is the true beneficial owner (beneficiary). The person holding the asset for your benefit is the trustee. The trustee has legal ownership only. When you are the trustee the whole world thinks you are the true owner. If you are not the true owner then you are able to show there is a trust – such as a Declaration of Trust.
If the beneficial owner is 18 or over and of sound mind then you boss the trustee around. (Well you do if you do a Declaration of Trust as that is what the document states.) You tell the trustee what to do with your asset. To the world the asset may look as though it belongs to the trustee. But in reality the asset is yours because you are the beneficiary. If you have a Declaration of Trust, then at any future time you can instruct the trustee to transfer the asset into your name beneficially.

What does all that mean? Basically, the trustee looks after the asset for you – as you direct. The trustee just holds the asset for you. The trustee must do whatever you say regarding the asset. When you want the asset back you simply demand it back.

So why would you want a Declaration of Trust?
Some examples include:

1. Your next door neighbour has his home for sale. You want to buy your next door neighbours house. He doesn’t like you. He would rather cut his arm off than allow you to buy his home. You complete this bare trust making a friend of yours buy the property on your behalf – secretly. After the next door neighbours sign then you use the Bare Trust to have the property put into your name. There is no stamp duty or Capital Gains Tax when you transfer the property from your trustee’s name to your name. Job complete.

2. You want to be a major shareholder in a new Company, but don't wish to have your name on the share register at this stage. Fine. You complete a Bare Trust. Only your trustee’s name appears on the share register.

You can start building the document for free. You can read all the hints for free. You can read the summary for free. Only at the end are you invited to actually buy the document.

Will this document fulfil your needs?

Would you like to know in advance whether this document contains all of the clauses and provisions you need?

Depending on how you answer the questions, there are many possible ways your final document will look. However, we have produced an example based on the most common answers.

To see a sample of what your ‘Declaration of Trust (before you buy)’ will look like, click here.

Note: The sample of your ‘Declaration of Trust (before you buy)’ may not be the complete document. Most of our samples only provide you with the first few pages of the document. If you wish to see the entire document, just purchase the document. If you are not happy with the document for any reason let us know and we will happily refund your money.

To view the sample of ‘Declaration of Trust (before you buy)’ you will need Adobe Acrobat.