Declaration of Trust

How to generate a Declaration of Trust

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What is the Declaration of Trust?

A Declaration of Trust is an instrument by which a shareholder declares that he/she is holding the share on behalf of another person/entity.

A Declaration of Trust is executed as a deed by the shareholder under whose name the shares are registered, who is referred to as the “nominee”. The person/entity on behalf of whom the shares are held is referred to as the “beneficial owner”.

A Beneficial owner has the privilege of remaining anonymous whereas a Nominee name is written in all the records. A nominee has to sign a Deed of Trust which states that they won’t get any benefit from the shares in the future and are not the legal owner of the shares.

Is a Declaration of Trust legally binding?

A Declaration of Trust is a written statement to appoint a trustee on certain terms and conditions. It is a legally binding document that records the predetermined conditions between joint owners. It is also known as “Deed of Trust”.

How does a Declaration of Trust work?

It basically consists of two parties, trustee and beneficial owner. A trustee lets you use their name to act as the registered owner of the assets or shares but in reality, they only hold the assets/shares for your benefit. So, it will give you a legal advantage in case of any dispute in the future.

Conclusion

A Declaration of Trust is an important instrument that can be used for buying shares by creating a nominee shareholder or it can even be used for buying the property with joint owners.

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About Author

Daniel Walker

Daniel Walker is the Founder and Chief Executive Officer of Zegal, the trusted legaltech firm. Prior to founding Zegal, Daniel practised at DLA Piper, Stephenson Harwood and Clyde & Co, in Hong Kong, Singapore, and the UK.

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