What does family trust mean in real estate?

Family trust in real estate is a legally arranged property in which a trustee is entitled to a property and effectively manages it for the benefit and advantages to be gained out of its use or enjoyment by certain family members. Real property is generally the deeds to land or a house. A family trust is an arrangement whereby a settlor transfers property and assets to a trustee to take care of and manage in a way that benefits the targeted beneficiary. A family trust for real estate mainly means dealing with and safeguarding the investment for and on behalf of the current and future generations at the same time while getting certain legal and financial benefits.

When real estate is placed under a family trust, the trustee will hold the legal title of ownership in the property, but the management will be in accordance with the provisions of the trust deed for the benefit of the beneficiaries. This means that, despite the trustee controlling the property, it cannot be used to an advantage of a trustee. The trustee should not act otherwise than in the interest of the beneficiaries.

Family trusts are important vehicles in real estate to secure the following:

1. Asset Protection: Ensuring real estate bequested to family trusts is protected against the possibility of creditors, litigation, or claims that may arise against individual members of the family.
2.  Estate Planning: A family trust can be established so that the property can easily change hands, moving from one generation to another. There would be no need to go through probate—a lengthy and burdensome legal process.
3. Tax Planning: Subject to the jurisdiction, a family trust could provide a settlor with a possibility in tax planning or saving income taxes on the property.
4. Control and Protection: A trust enables the settlor to give up the property and yet specify the way it should be controlled and distributed, hence ensuring the property is used according to their wishes.

A family trust for real estate is basically a strategic tool that combines ways of management—protection, and taking care of family property with adequate legal security and financial benefits. At One Pacific Trust, our vision is to be the leading provider of trust services.