Home Builders in Knoxville TN | Saddlebrook Properties
Purchasing a Home as a Trust Fund Investment

Purchasing a Home as a Trust Fund Investment

If real estate investments are one of your reasons for buying real estate, a land trust could offer you a number of advantages. Setting up a trust is a simple arrangement in which assets are owned and managed for the benefit of someone else, such as a family member.

In effect, you’re setting aside funds or investments for the beneficiary and saving taxes on them, while being able to manage them and make defining decisions. So you get to enjoy all the benefits of “giving away” a substantial amount of money and the costs associated with it, but still retain control.

Here are five good reasons for purchasing a home as a land trust investment:

Keeping Financial Affairs Private

When you buy a home in the name of a land trust, only the trust or trustee’s name appears on the title. The beneficiary of the trust is kept confidential, which means it doesn’t appear on credit reports or other sources of information. Your ownership role is unknown, especially if you purchase the property for cash (i.e. without needing a mortgage) and if you nominate an independent trustee such as an attorney. All this can be very beneficial should you face litigation at any point. The privacy aspect benefits property taxable values, too, because assessors often re-evaluate real estate based on recent sale prices. If sale prices are unknown, however, no reassessments will be triggered.

Ease of Sale and Transfer

Incurring a judgment or lien does not apply to real estate held in a land trust. That means you are free to sell your property at any point without experiencing any difficulties caused by judgments in your name. This also includes IRS liens. When it comes to transferring ownership, the interests in a trust are considered personal property, not real estate, which makes it much simpler to transfer. This option enables you to avoid transfer costs in all states except Pennsylvania, and prevents the sale price from becoming a matter of public record because all that has actually been sold is the beneficial interest.      

Multiple Owners

It’s not uncommon for friends, family members or even business partners to purchase real estate as a group, but it’s exceptionally difficult to manage property with multiple owners. Every co-owner is required to sign each and every contract, deed or mortgage, which can be challenging if they live in different areas. By setting up a land trust managed by a qualified trustee the beneficiaries can give direction to the trustee to act on behalf of the group.

Avoiding Probate

When the owner of a piece of real estate passes away, the property typically goes through probate for the court to confirm the new ownership, even if it’s clear who the beneficiary is. Because property owned by a trust is considered personal effects rather than real estate, probate is not required for real estate included in the interests. Provided the trust documents include additional beneficiaries, the property passes to them on the death of the primary beneficiary. This helps reduce both legal fees and the long delays caused by the probate court system.       

If you’re looking for new ways to provide for your family while simultaneously achieving financial growth and stability, buying a home via a land trust in a new, well-managed community could provide you with a viable option. You can rest assured your investment will increase in value, retain your privacy by means of the trust structure, and appoint a family member as the beneficiary should anything happen to you.

Keep in mind that legal constructs can be complicated and the don’t always work out as expected, so consult with a qualified attorney before you decide to buy real estate through a land trust. Check out our Knoxville homes for sale and chat with one of our financial advisers to find out how you can benefit from this option.


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