The 3 Reasons to Use a Nominee Trust in Massachusetts

When holding title to any asset on behalf of multiple trusts or entities, having a nominee or agent on behalf of the entities can be more convenient. The nominee trust is a tool that meets this need. For example, when husband and wife each have their own trust, but they want to continue having joint accounts for convenience and simplicity, they can put their joint bank accounts and investment accounts under the nominee trust.

Nominee trusts are known by many different names:

• Investment trusts
• Realty trusts
• Funding trusts
• And more…

There are 3 main advantages for using a nominee trust: owner anonymity, an effective gifting tool, and title simplification.

Owner Anonymity

Only one entity or trust, in this case the nominee trust, takes title, so the public will not know how many other entities or partners are behind the title holder. There are many reasons you may want to keep your name disconnected from the title; nominee trusts give you this separation.

Gifting Tool

One advantage of the nominee trust arrangement is to facilitate splitting up an asset held by the trust of a person who has passed away into tax saving shares, such as a marital share and a family or bypass share. The title of the investment trust does not have to change, at least initially. 

Eventually, the sub shares will need to be broken out of the investment trust. During the first year, often the investment or realty trust can stay intact and can follow the Social Security number of the surviving spouse.

Title Simplification

An advantage of the nominee trust is that you only have to deal with one title holder no matter how many owners there really are behind the scenes.

When owning real estate together, two partners can have their trusts be the owners in whatever proportion they have agreed to (e.g., 50/50, 70/30, etc.). 

At the death of a partner or spouse, the nominee trust continues to hold on to the interest of the deceased partner in their trust, or in their estate if they didn’t have a trust. If the deceased partner’s interest was held by a company, such as an LLC, then that LLC continues to hold the interest within the nominee trust.

Trusts are powerful tools that meet so many needs of our clients. Nominee trusts are just one of many tools in our toolbelt. It’s important to speak with an attorney who works with trusts day in and day out so all options are considered before jumping into a trust that isn’t the best fit. This is one of the many reasons to Seek Out a Trust Specialist.