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Declaration of trust

Declaration of trust

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If there is a declaration of trust giving a property's beneficial ownership to another person ... and then they rent the property out... should the tenancy agreement be with the tenants and the legal owner at land registry or the tenants and the beneficial owners by way of the trust... they are using a management agent and they are insisting it is with the legal owner?

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By Paul Crowley
12th Aug 2020 21:16

There is probably a good reason why some people choose not to act for trusts

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By Constantly Confused
13th Aug 2020 08:37

Paul Crowley wrote:

There is probably a good reason why some people choose not to act for trusts

It's not really a trust so much is it though, as in you don't do trust accounts/returns or any of that nonsense. It's a letter saying 'What ho! I own this property but you can have the profits!'

Or at least that's what my DoTs always say (verbatum).

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By Paul Crowley
13th Aug 2020 08:53

If something is a gift, call it a gift.
I am amazed at the legal profession's over use of the word trust.
I am also amazed at the number of service charge companies with trust returns.

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By Calculatorboy
13th Aug 2020 07:52

This is not a legal forum..the clue is in the title

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By mikeyban
13th Aug 2020 09:33

I am afraid the days are gone of just preparing accounts... the skill set clients want from the modern accountant is so much more... if you are just preparing accounts and no business advice prepare to lose clients to people who are..

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By Tax Dragon
13th Aug 2020 09:56

The most important skill of all is, as it always was, to know your limitations. Some are set out in statute (such as the LSA); some you need to work out (or find out) yourself.

When you find yourself giving legal (not business) advice about a certain matter, when you further find yourself needing to ask about the advice you propose to give on Aweb…. it's a good time to stop and ask yourself whether you are acting within your limits. (It's a question I find myself asking of me more often than ever before, as wisdom replaces mere knowledge.)

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By mikeyban
13th Aug 2020 11:43

I do not disagree with your comments... I was querying if anybody has come across this before as a DOT these days are quite common...

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By Paul Crowley
13th Aug 2020 11:51

The trouble is that they are secret arrangements.

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By Tax Dragon
13th Aug 2020 12:06

But they don't all say the same. For example, I would humbly suggest that ConCon starts referring his clients to a different solicitor to get their deeds drawn up, as there's a risk that the one they are using at the moment (much as I love the word "ho!" and want to see it in more legal documents) is creating IIP trusts, not (as I assume was intended) bare trusts. Ouch! Very different legal consequences; very different tax treatment.

Why do you (I guess you do) disagree with the management agent?

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By mikeyban
13th Aug 2020 13:03

Because they were not sure either!

They asked me...hence my question...

They have concluded the legal owner...

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By mikeyban
13th Aug 2020 13:03

Because they were not sure either!

They asked me...hence my question...

They have concluded the legal owner...

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By Tax Dragon
15th Aug 2020 08:36

Have you asked, or thought about asking or suggesting your clients ask, the solicitor that drew up the deed of trust?

There's a non-zero risk that, if the deed was not drawn up by a solicitor, then it would not be recognised in a court of law. That's not a good state of affairs from a legal perspective, obviously, but also it puts you in a difficult position as accountant and tax advisor, because it means that any tax advice you have provided in reliance on the deed might be wrong; moreover you'll need to know the legal status for future tax compliance.

One suggestion (only relevant if the clients were so silly as to not involve solicitors already) is that you advise them to pop along to such a firm now, get a waterproof deed in place. Much better for them, soooo much better for you. (And you'll look good because you caught the issue right at the start,
before any serious issues arise.)

It'll cost a couple of hundred quid but that's obviously nothing in context. And, while they're there, they could slip the question in.

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By mikeyban
15th Aug 2020 14:53

Hi Tax dragon

That’s a brilliant suggestion and the honest truth is it is one I have now suggested yesterday to the clients..

Many thanks...

Mike

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By Justin Bryant
18th Aug 2020 10:17

Obviously the tenancy agreement s/be with the legal owner. A DoT can be done by anyone (like a will), but (unlike a will and like any deed) it's a reserved activity under LSA 2007, so it's a criminal offence for non-regulated people (i.e. non-lawyers) to draft these for a fee.

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