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Should I Buy Property in the Name of a Trust Rather than in my Individual Name?

Many of our clients who are in the middle of buying a property ask us if they should buy the property in the name of a Trust. Mostly likely this is the best way to take the title and here’s why:

Nowadays, all information about property purchases and sales is public and easily accessible to anyone with access to a computer and the internet. That means that as soon as you close on a purchase, anyone who wants to know anything about you knows that you bought a property, from who, for how much and other details.  In fact, if a potential or actual creditor is looking for information about you and your assets, they do not need to look very far, it’s all out there!

Purchasing a property in the name of a Trust rather than in your individual name provides certain benefits:

First, when you purchase real estate in the name of a Trust. Your name will not appear in public records. For example, your property will be titled in the name of the Trust and shown as owned by “The Dolphin Trust” or the “ABC Family Trust.” This way, you retain full privacy as to ownership of your real estate. Creditors (current and potential) will likely not see the property as your asset.

The Trust Agreement itself is confidential and nobody knows who are the beneficiaries of the Trust, or in some cases, the grantors of that Trust. When you are buying real property in the name of the Trust (rather than transferring it to the Trust after your purchase), you have a potential to hide the identity of the Grantors of the Trust.

Second, most judgments and liens that exist against beneficiaries would not affect the Trust and hence the property purchase transaction.

Another benefit of purchasing property in the name of a Trust rather than in an individual name is that your heirs and beneficiaries avoid the entire expensive and cumbersome process of probate after you are gone.

You should note that if you plan to secure a mortgage for your purchase, most lenders will allow you to purchase the property in the name of a Trust as long as you personally guaranty the loan. If the Trust is done right, you will not lose any tax benefits from home ownership such as tax deductions if the property is titled in the name of a Trust.  All tax filings, deductions, benefits, etc. will continue to flow through to your individual returns. In fact, provided that the Trust is set up correctly and in accordance with your intents and wishes, there will not be any differences in your use, control and enjoyment of the property.

It is worth mentioning that if the purchase is a cooperative apartment, some cooperatives do not allow trusts as owners while others fully allow such ownership. It is important to check with the management prior to purchase to confirm the proper way to take ownership.

It is also important to note that if the property purchase is for investment purposes such as a rental property, taking ownership in an LLC which in turn is owned by a Trust provides an additional layer of protection and privacy against possible lawsuits from your tenants and creditors.

In general, prior to closing on a property purchase transaction is an ideal time to consider taking title to the property in the name of a Trust rather than in your individual name.  Of course if you already own the property, transfer to a Trust is also possible and in many instances advisable, even if the property is subject to a mortgage. Call us to speak with knowledgeable and qualified attorneys to discuss your individual facts and circumstances to determine the best course of action for your needs, goals and intentions.

The attorneys at Beress & Zalkind PLLC are readily available to meet your legal needs.

About the Author

Viktoria Beress
Viktoria Beress

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