Strategies for a Second Marriage
What is meant by “trustee ownership”?
The form of property ownership most rapidly expanding in the estate planning field is that of trustee ownership. By establishing a revocable living trust, you can control who will receive your property at your death and avoid the probate process as well.
When you establish a revocable living trust, you will put most of your assets into that trust. A common misunderstanding is that the trust owns the property within it. This is not really true. The trustee of the trust holds legal title to the trust property. The trust beneficiaries hold beneficial title to the trust property. Accordingly, the trustee has the power to invest, reinvest, buy, sell, and trade the trust property (as defined in the trust agreement), while the trust beneficiaries have the right, as provided in the trust, to use the trust property and receive the income or principal of the trust.
It is both common and generally advised that the maker of a revocable living trust be the trustee and the beneficiary of his or her trust (married couples can be joint trustees and beneficiaries of a joint trust). Thus the maker alone can control both the managerial and investment decisions as trustee while using or otherwise spending the trust assets without limitation as beneficiary.
Upon the maker’s death, all the trust property will pass to the beneficiaries named by the maker in the trust upon the terms and conditions that the maker chose. These trust assets are not subject to the legal hoops, costs, and delays of the probate process.
As in the case of sole ownership, the trust assets that are included in the estate of the trust maker receive a step-up in basis at death.
· Is nominee ownership the same as trustee ownership?
A nominee is any person or organization that takes title to property on behalf of someone else. Nominees are sometimes used so that the real owner of the property can hold title to it in another name. For example, some people do not want it known that they hold property in trust. In these circumstances, the trustees will form a partnership to hold title to the property. The partnership is the nominee for the trust; the trust owns the property indirectly, but the partnership’s name is on the title of any property.
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