An important estate planning tool for property owners is a nominee trust. Unlike other trusts, this one specifically applies to real estate assets. It is a cost effective solution with many benefits. Here’s a closer look at using nominee trusts to buy real estate in MA and some of its key benefits.
Overview of Nominee Trusts
Nominee trusts can be used to purchase real estate in the name of the trust. Like other trusts, trustees are assigned to manage it. However, one important difference is that trustees do not have decision-making power. They must obtain approval from the beneficiaries of the trust. Beneficiaries essentially own the property and are therefore responsible for finances and liabilities related to it, but they also benefit from any tax advantages. The trust is used mostly for public anonymity of ownership but not for shielding individual beneficiaries from liability.
Benefits of Nominee Trusts
The key benefits of creating a nominee trust are cost, privacy, and convenience. To form a nominee trust, there is only a one-time filing fee at the Registry of Deeds. A separate document, called a “Schedule of Beneficial Interests”, can list beneficiaries and need not be filed publicly. The trust can then be listed as owners of assets such as real estate. Beneficiaries of the trust can change without needing to alter property deeds, which is convenient.
Disadvantages of Nominee Trusts
As we mentioned above, nominee trusts do not shield beneficiaries. Beneficiaries are responsible for expenses, such as taxes. They can be liable for the home, just as any other homeowner would (for instance, if someone were injured at the property and wanted to sue). Lastly, it also doesn’t protect the property from any creditors. This can be complicated in cases with multiple beneficiaries.
Should You Use Nominee Trusts to Buy Real Estate in MA?
Before deciding whether to use nominee trusts to buy real estate in MA, consider your specific goals for wanting a trust to begin with. The above is just a brief overview, so you may want to learn more about this and other types of trusts before making a decision. Contact Martino Law Group to discuss nominee trusts and your overall estate plan.