A privacy trust can help Maryland and Washington, DC property owners keep their individual names off the public deed and add an additional layer of privacy to their real estate ownership.
When you purchase a home or investment property, do you want anyone with an internet connection to be able to find out where you live or what real estate you own?
For many property owners, the answer is no.
Real estate records in Maryland and Washington, DC are generally public records. A recorded deed can reveal the identity of the property’s owner, and increasingly sophisticated online databases make information about real estate ownership easier to locate and aggregate.
For buyers concerned about privacy, personal security, or keeping their real estate holdings out of easy public view, a properly structured trust may provide an alternative.
At Gentile Property Law Office, LLC, I help clients structure real estate purchases and ownership through trusts designed to provide an additional layer of privacy while also addressing estate-planning and property-management objectives.
These arrangements are sometimes described as privacy trusts, real estate privacy trusts, property trusts, or title-holding trusts. The terminology matters less than how the trust and real estate transaction are actually structured.
What Is a Real Estate Privacy Trust?
A privacy trust is not a special statutory category of trust in Maryland or the District of Columbia.
Instead, the term generally describes a trust intentionally structured so that real estate is titled in the name of a trustee rather than directly in the individual owner’s name.
Normally, if John Smith purchases a property individually, the recorded deed identifies John Smith as the owner.
With an appropriately structured trust, title may instead be held by a trustee in a fiduciary capacity for the trust.
The objective is simple:
The public land records identify the trustee as the record title holder rather than placing the beneficial owner’s individual ownership directly on the face of the deed.
That distinction can provide a meaningful additional layer of privacy.
It does not make the owner invisible, however, and it should not be confused with secrecy or anonymity.
Why Are Property Owners Interested in Privacy Trusts?
People have many legitimate reasons for wanting greater privacy concerning their real estate.
Some simply do not want a casual internet search to immediately connect their name with their home address.
Others have more significant personal-security concerns. Business owners, physicians, attorneys, executives, public officials, public figures, individuals involved in contentious professions, and people who have experienced harassment or unwanted attention may have particular reasons to limit the amount of personal information readily available through public records.
Real estate investors may also prefer not to have every property they own easily associated with their individual names.
And sometimes the concern is simply:
“My property ownership is nobody else’s business.”
A privacy-oriented trust can be one component of a broader strategy for addressing that concern.
Can a Trust Really Keep My Name Off the Deed?
Potentially, yes.
Trusts separate legal title from beneficial interests.
Rather than taking title individually, a buyer may arrange for a trustee to acquire legal title to the property in a fiduciary capacity.
The recorded deed therefore reflects the trustee’s ownership capacity.
The private trust agreement, meanwhile, establishes the rights of the settlor, beneficiaries, successor trustees, and other interested parties.
This distinction between the public deed and the private trust agreement is central to privacy-oriented real estate planning.
The exact structure must be carefully designed for the particular transaction, however. Financing, title insurance, transfer and recordation taxes, lender requirements, residency, estate planning, and the type of property involved can all affect the appropriate structure.
Is a Privacy Trust the Same as Anonymous Property Ownership?
No.
“Anonymous real estate ownership” is a popular internet search term, but it can be misleading.
A properly designed privacy trust can make it substantially more difficult for a casual search of the land records to identify the beneficial owner of property. It does not create absolute anonymity.
Banks, mortgage lenders, title companies, governmental agencies, courts, taxing authorities, and other parties may have legitimate legal or regulatory reasons to require disclosure of the individuals associated with a trust or transaction.
A trust also cannot lawfully be used to hide property from creditors, taxing authorities, courts, spouses, or anyone else legally entitled to that information.
The objective is privacy—not concealment.
That distinction is important.
Privacy Trusts in Maryland
Maryland recognizes trusts created by transferring property to another person as trustee or by an owner declaring that identifiable property is held as trustee.
That makes trust ownership a potentially useful tool for Maryland real estate.
Maryland also recognizes the use of a Certification of Trust. A certification can establish important information concerning the trust and the trustee’s authority without necessarily requiring disclosure of all of the trust’s dispositive provisions.
For a Maryland property owner concerned about privacy, this can be valuable because the complete estate-planning document does not ordinarily need to become part of the public land records merely because real estate is owned through a trust.
Maryland land records themselves remain public. A privacy trust therefore does not make the property disappear from the land records. Instead, careful planning focuses on whose name appears as the record title holder and how much information about the underlying trust must be disclosed publicly.
For how to transfer a Maryland property into a trust, please visit: https://gentileproplaw.com/how-to-transfer-a-property-into-a-trust-in-maryland/?utm_source.
Privacy Trusts in Washington, DC
The same general planning opportunity exists for real estate located in the District of Columbia.
DC law expressly permits property transferred to a trust to be titled in the name of the trust, the current trustee as trustee, or ‘the trustee’ as trustee.
This can create an attractive planning opportunity for a buyer who wants to purchase a DC residence or investment property without having his or her individual name appear as the direct owner on the recorded deed.
As in Maryland, however, the structure should be established before the purchase whenever possible.
It is generally easier to plan for privacy before title is acquired than to purchase property individually, create a public record connecting the owner to the property, and attempt to restructure ownership later.
Using an Independent Trustee for Greater Privacy
For clients seeking a higher level of privacy, one option is the use of an independent or institutional trustee.
Instead of the buyer appearing as trustee on the deed, an independent trustee takes title in a fiduciary capacity.
This can provide a greater separation between the individual and the publicly recorded ownership of the property.
Depending upon the client’s objectives and the requirements of the transaction, the trust documents can establish procedures for successor trustees and future administration of the trust.
This type of structure requires careful coordination among the client, attorney, lender, title company, and trustee.
What Happens If I Have a Mortgage?
Financing is one of the most important issues in privacy-trust planning.
A cash buyer generally has considerably more flexibility.
When a mortgage is involved, the lender must be considered from the beginning. A borrower should never assume that a lender will permit title to be held in a particular trust structure.
The trust should therefore be coordinated with the mortgage lender and title company before closing.
In some transactions, a lender may approve acquisition through a trust provided that the borrower retains the required beneficial interest and the trust documents satisfy the lender’s underwriting requirements.
In others, the lender may impose different requirements or decline the proposed structure.
The key is advance planning.
Trying to solve the issue several days before settlement can significantly limit the available options.
Is a Privacy Trust the Same as an LLC?
No.
An LLC and a trust serve different purposes.
A limited liability company is frequently used for investment real estate because it can provide liability separation and a formal business ownership structure.
A trust is primarily a fiduciary and estate-planning arrangement and does not automatically provide the liability protection associated with an LLC.
For some investors, the appropriate structure may involve both trusts and LLCs.
For an individual purchasing a personal residence, however, an LLC may create financing, insurance, tax, or practical complications that make a trust more appropriate.
There is no universal “best” privacy structure. The correct structure depends upon the property and the owner’s objectives.
Does a Privacy Trust Provide Asset Protection?
Not necessarily.
This is another important distinction.
Privacy planning and asset-protection planning are not the same thing.
Placing property into a revocable trust generally should not be viewed as placing the property beyond the reach of legitimate creditors.
Likewise, keeping an individual’s name off the face of a deed does not change the person’s legal obligations or permit assets to be concealed.
Privacy can nevertheless have independent value.
There is a meaningful difference between information that is legally discoverable when necessary and information that can be located in seconds by a neighbor, customer, disgruntled former employee, internet stranger, or casual online search.
A privacy trust is designed primarily to address the second concern.
Can a Privacy Trust Also Avoid Probate?
Potentially, and this is one of the advantages of integrating privacy planning with estate planning. How your real estate is titled can be just as important to your estate plan as your will or trust.
A properly funded revocable trust can provide instructions for administration of the property after the owner’s death without requiring the property to pass under a will through the ordinary probate process.
The trust can also address incapacity, successor trustees, beneficiaries, and eventual distribution of the property.
For some clients, therefore, a privacy trust can accomplish several objectives simultaneously:
- Enhanced real estate ownership privacy;
- Continuity of ownership during incapacity;
- Probate avoidance;
- Estate planning;
- Successor trustee planning; and
- More controlled administration of real estate after death.
The precise benefits depend upon how the trust is drafted and funded.
When Should a Privacy Trust Be Created?
Ideally, before you sign the final purchase and financing documents and certainly before settlement.
If privacy is an important objective, the attorney should have enough time to coordinate the trust with the lender, title company, and trustee.
A typical privacy-trust transaction may involve:
- Determining the client’s privacy and estate-planning objectives;
- Creating the appropriate trust;
- Selecting the initial trustee;
- Preparing a Certification of Trust;
- Coordinating the structure with the mortgage lender, if applicable;
- Coordinating title requirements with the settlement or title company;
- Taking title in the appropriate trustee capacity at closing; and
- Preparing any necessary successor-trustee or trustee-resignation documents.
The earlier this process begins, the more options the buyer generally has.
Can I Create a Privacy Trust After I Already Own the Property?
Often, yes.
An existing owner may be able to transfer property into an appropriately structured trust by deed.
But transferring existing real estate raises additional issues, including mortgage restrictions, title insurance, transfer and recordation taxes, property-tax consequences, condominium or homeowners association requirements, and the effect of the transfer on existing liens.
For that reason, an existing owner should have the proposed transfer reviewed before recording a deed.
Who Should Consider a Real Estate Privacy Trust?
A privacy-oriented trust may be worth considering if:
- You are buying a home in Maryland or Washington, DC and do not want your individual name readily associated with your address;
- Personal or family security is a significant concern;
- You are a business owner, executive, professional, public figure, or other individual concerned about easily searchable personal information;
- You own multiple investment properties;
- You want greater separation between your public identity and your real estate holdings;
- You are already considering a revocable trust for estate planning;
- You want to combine property privacy and probate avoidance; or
- You simply value keeping your personal financial affairs private.
A Privacy Trust Is About Privacy, Not Secrecy
The most important concept is also the simplest.
A real estate privacy trust is not designed to make someone legally invisible.
It is designed to avoid unnecessarily placing personal information into easily searchable public records.
Government agencies, lenders, title insurers, courts, and other legally authorized parties may still be entitled to information regarding the beneficial ownership of the trust.
But there is no reason every member of the general public necessarily needs the same level of immediate access.
For clients who value privacy, discretion, personal security, and confidentiality, thoughtful trust and title planning can create a meaningful additional layer of protection.
Planning to Purchase Real Estate in Maryland or Washington, DC?
If you are considering purchasing a home or investment property in Maryland or Washington, DC and want to explore whether a privacy trust or other private real estate ownership structure is appropriate, it is best to address the issue before settlement.
Gentile Property Law Office, LLC assists clients with real estate privacy trusts, revocable trusts, deeds, title planning, estate planning, and private real estate ownership structures in Maryland and Washington, DC.
The appropriate structure depends upon the property, financing, estate-planning objectives, and desired level of privacy.
Contact Gentile Property Law Office, LLC to discuss whether a privacy-oriented trust structure may be appropriate for your next Maryland or Washington, DC real estate purchase.
This article is provided for general informational purposes and does not constitute legal advice. The appropriate ownership and trust structure depends upon the facts of each transaction.
0 Comments