The Benefits of a Title Holding Trust

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The Title Holding Trust is an easy and inexpensive stucture for acquiring, holding and conveying legal and equitable title to California real estate or personal property.  The Title Holding Trust provides a number of important and distinct advantages and benefits for real estate investors and property owners.  It can be an especially powerful tool in sheltering individuals from potential liability and risk that are associated with property ownership while providing traditional estate planning benefits at the same time. 

Exposure to Risks and Liabilities

Real estate investors and property owners are exposed to a great deal of potential liability and risk just by acquiring, owning and managing real property.  The Title Holding Trust can be an extremely effective method for mitigating this liability and risk by helping the real estate investor and property owner to privately and confidentially acquire, hold, manage and dispose of legal title to real estate and personal property.

Privacy and Confidentiality of Asset Ownership

Privacy and confidentiality of real estate ownership is probably the most important advantage and benefit of using the Title Holding Trust.  The Title Holding Trust allows you to acquire, hold and convey legal title to real estate and/or personal property on a confidential and private basis.  Your name and your ownership of the asset is not disclosed to anyone. 

Real estate or personal property acquired and held in a Title Holding Trust is held in the name of the Trustee with a reference to the trust number.  There is no reference to your name or your ownership of the asset.  Public records, including county recorders', assessors' and tax collectors' files, would reflect the legal ownership of the real estate or personal property as follows:

Exeter Fiduciary Services, LLC, as Trustee for Trust No. XX XXXX. 

Your name as beneficiary (owner) is not reflected on any public record.  Your identity as beneficiary (owner) of the Title Holding Trust is not disclosed unless authorized by you, the trust agreement, or required by law.

Ownership Succession Planning

Real estate owners often create joint tenancies for the sole purpose of passing ownership of the real estate to the surviving joint tenant upon their death. However, this approach gives the joint tenant immediate ownership and management of the property once the deed is recorded. There may also be gift tax consequences when adding a joint tenant to the legal title on real estate.

A Title Holding Trust provides a very smooth succession of interest upon the death of the beneficiary (owner).  There is no immediate gift of the real property and the beneficiary (owner) retains complete control over the property during his or her lifetime. Upon the death of the beneficiary (owner), the beneficial interest automatically passes to his/her children or whomever else is named as the successor beneficiary without the necessity or costs of probate. The designation of a successor beneficiary or beneficiaries is fully revocable and can be changed at anytime.

Avoidance of Ancillary Probate Administration

Non-resident owners of California real estate can avoid ancillary probate proceedings upon their death because their interest in their trust is considered personal property and not real property.  You own an interest in the trust (personal property) while the trust owns the real estate.  The interest in the trust passes to your heirs under probate or administration proceedings in the state where the deceased owner resided at the time of his or her death.

Transferring Title Made Easy

The trust agreement may provide for a single or limited number of beneficiaries or their agents to
control the power of direction to encumber or dispose of property. Because the interest under
the trust is personal property, it is not necessary to have the spouse of a beneficiary join in the
execution of a deed or trust deed. This feature may be advantageous where multiple beneficiaries
are involved and are widely scattered or otherwise inconvenient to contact. 

Transferring or Selling a Partial Interest

The beneficial interest in a Title Holding Trust can be easily transferred by an assignment of the beneficial interest without the formal requirements of a recorded deed. The trust continues for the benefit of the new beneficiary (owner). This technique is especially convenient when fractional interests are transferred between multiple beneficiaries or owners such as heirs. 

The transfer or assignment of the beneficial interest in the Title Holding Trust also qualifies as a transfer or conveyance of the underlying real property interest and therefore qualifies as a transfer of real estate for 1031 exchange purposes. 

Convenient Estate Planning Strategy

Lawyers and other financial and estate planning professionals can utilize the Title Holding Trust
to accomplish many of the advantages of a living trust on behalf of their clients. This convenient and standardized estate planning vehicle can achieve privacy of ownership, probate avoidance, and succession of beneficial interests in the trust can be assigned to a donee pursuant to a gift program without fractionalizing the title of record to the real estate. This type of an estate reduction program is effective to utilize the annual gift tax exclusion and reduce federal estate taxes. 

Collateral for a Loan or Line of Credit

The beneficial interest may be pledged as collateral for a loan or line of credit without the necessity of executing a trust deed or mortgage. This is accomplished by executing a collateral assignment to the lender. When the loan is paid off or the line of credit is terminated, the beneficial interest is  reassigned to the borrower. 

Family Law/Divorce Settlements

Attorneys can use the title holding trust to retain control over a parcel of real estate during occupancy by a divorced spouse and/or dependent children. Valuable property can be retained by the parties as an investment, avoiding untimely sale. Their proportionate interests can be protected and set forth on the trust agreement.

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