Many different trusts are available that can hold (and transfer) personal and real property.
Then, there is the realty trust. This specific legal arrangement is generally used for holding real estate. When set up and operated correctly, a realty trust can provide a couple of benefits: Anonymity and simplicity.
A realty trust, also known as a nominee or real estate trust, isn’t really a “trust,” per se. In its most basic form, a trust is a fiduciary agreement or relationship in which a trustor (also known as a grantor) assigns a trustee to hold title to and make decisions concerning real estate property on behalf of a beneficiary or beneficiaries.
Through a realty trust, a trustor still assigns ownership of real estate to a trustee. However, the beneficiaries have control or decision-making power over what to do with the asset/assets. In this case, the trustee is an agent of the beneficiaries.
Anonymity: Beneficiaries Under Wraps
When it comes to real estate ownership, the deed or title – containing names of ALL the owners – is recorded and filed with the appropriate county government offices. All U.S. states require that the purchasers or transferees be listed as legal title owners of that property.
The issue is that anyone can look up those property owners and use that information for any purpose.
But using a realty trust can help keep the names of the beneficiaries private. The only thing on the certificate and deed is the trustee’s name. This means that the names of the actual owners or beneficiaries can be hidden from public view, potentially maintaining privacy.
Simplicity: Straightforward Transfer of Assets
Another reason for using a realty trust versus another legal formation is that it can allow for a more effortless real estate transfer once the trustor dies. The trustor can specify what percentage of the real estate goes to each beneficiary when establishing the realty trust.
The trustor can also change the percentages without much red tape. Specifically, the trustor doesn’t have to re-record the deed each time they might want to change the percentage of interest in the property or properties that the trust holds. In many states, such a change requires submission of a simple amendment to the Schedule of Beneficiaries.
Realty trusts can be a helpful legal set-up for holding and distributing real estate assets while maintaining privacy and ease of asset transfer. But the set-up and use of nominee trusts must conform to various state laws. It’s all too easy for mistakes to occur, which could lead to problems.
As such, work with a skilled attorney familiar with regulations and realty trust set-ups.