Confused by the difference between a deed of trust and a deed of gift?

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A deed of gift is a signed document that voluntarily and without recompense transfers ownership of real, personal, or intellectual property from one person (or institution) to another. It should include any possible conditions specifying access, use, preservation etc. Full title and ownership rights are transferred to the beneficiary of the gift.

A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a settlor, who transfers some or all of his or her property to a trustee. The trustee holds that property for the trust’s beneficiaries. Trusts have existed since Roman times and have become one of the most important innovations in property law. Full title and property rights are transferred to the trustees to act in the interests of the beneficiary as set out in the trust deed.

Depending on the aims of the settlor or transferor will depend on which type of deed is used to transfer the property. Generally trusts are used as they allow the settlor a degree of control over how the property is to be used whereas gifts are used when no control over the asset is required. There is also different tax treatment of each type of deed. It’s quite a complex area, so it’s best to take professional tax advice.

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