Vesting Declaration When Appointing New Trustees: s40 Trustee Act 1925
A vesting declaration in the deed of appointment automatically transfers most trust property to new trustees — but registered land, company shares, and certain leaseholds require separate transfers regardless.
What Vests Automatically Under s40?
| Type of property | Automatic? | Notes |
|---|---|---|
| Unregistered land | Yes | Vests automatically via s40 vesting declaration in deed |
| Registered land (post-LRA 2002) | No — separate transfer needed | Must be transferred via Form TR1 and registered at HMRC Land Registry (AP1) |
| Company shares / securities | No — separate transfer needed | Requires a stock transfer form or transmission form; shares must be re-registered in new trustees' names |
| Cash and bank accounts | Yes | Vests automatically; bank will need a certified copy of the deed before allowing access |
| Personal chattels | Yes | Vests automatically — no separate document needed |
| Leasehold with landlord consent clause | No — separate transfer needed | Assignment requires landlord's consent; s40 does not override contractual consent requirements |
| Stocks in name of Public Trustee or nominee | No — separate transfer needed | Separate transfer needed |
| Mortgages (legal charges) | Yes | Vests automatically under s40 without separate assignment |
Frequently Asked Questions
What is a vesting declaration and when is it used?
A vesting declaration is a statement included in a deed of appointment (or deed of retirement and appointment) of new trustees that declares all the trust property to be vested in the incoming trustees jointly with any continuing trustees. Under section 40 Trustee Act 1925, where a deed contains an express vesting declaration, all trust property that is capable of automatic vesting (broadly, property other than registered land, company shares, and leaseholds with landlord consent clauses) is transferred to the new trustees automatically as a result of the deed — without any separate conveyance, transfer, or endorsement. The vesting declaration is therefore a highly practical mechanism that avoids the need to separately transfer dozens of assets every time a trustee retires or a new one is appointed.
Does a vesting declaration work for registered land?
No. Registered land does not vest automatically under section 40 Trustee Act 1925 even if the deed contains a vesting declaration. To transfer registered freehold or leasehold title to new trustees, a Form TR1 (transfer of whole of registered title) must be executed and registered at HM Land Registry by filing an AP1 (application to change the register). This is because the proprietorship register at the Land Registry is the authoritative record of legal title — the title passes only on registration, not on the execution of the deed. Until the Land Registry register is updated, the old (and possibly retired or deceased) trustees remain the registered proprietors, which can cause practical difficulties when selling or mortgaging the property.
What happens to company shares when new trustees are appointed?
Company shares do not vest automatically under section 40. When trustees hold shares in a company — whether quoted on a stock exchange or shares in a private family company — the shares must be transferred into the names of the new trustees by the usual means: a stock transfer form (for certificated shares in companies under Companies Act 2006 s770) completed by the outgoing trustee(s) and presented to the company registrar for registration. For shares in CREST (electronic settlement), the CREST operator must be instructed to move the holding. Until the share register is updated, the outgoing or retired trustee(s) remain the registered holders and cannot in good conscience exercise the voting rights without following the instructions of the incoming trustees.
Can a retiring trustee insist on a vesting declaration in the deed?
A retiring trustee is entitled under section 40 to insist that a vesting declaration is included in any deed of retirement and appointment so that they are effectively discharged from all obligations in relation to the automatically-vesting property on the execution of the deed. Without a vesting declaration, the retiring trustee might remain technically responsible for the unregistered trust property until separate transfers are completed. The practical importance is greatest for unregistered land, mortgages, and other property that vests automatically — a clear vesting declaration in the deed gives the retiring trustee immediate protection. The retiring trustee should ensure the vesting declaration is not accidentally omitted by a solicitor drafting the deed.
What happens if no vesting declaration is included in the deed of appointment?
If a deed of appointment of new trustees does not contain an express vesting declaration, section 40(1)(b) Trustee Act 1925 implies a vesting declaration — the section provides that even where no express declaration is made, the deed is deemed to contain one. However, this implied vesting declaration has the same limitations as an express one: it does not operate on registered land, company shares, or leaseholds with landlord consent clauses. The implied declaration under s40(1)(b) is therefore a safety net, not a substitute for proper drafting. A carefully drafted deed will always include an express vesting declaration to avoid any doubt about its terms and to notify third parties such as banks that the property has vested in the new trustees.
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