In this article, we’ll talk about how to name a trust. It’s an often overlooked—but important—part of setting up a trust.
Think of trust as a set of directions for how to handle certain assets. You can control when, where, and to whom they’re distributed. A trustee, an individual or institution, typically handles the distribution of those assets to your beneficiaries.
We’ve gone over the benefits of setting up your rental property in land trusts in past articles. They help protect you from liability in a way that no LLC really can, but if you mess up the name, you could open yourself up to a host of other issues.
Why does the name of the trust matter at all? Couldn’t it be anything you want it to be, as long as the directives of the trust are carried out?
Knowing how to name a trust is important to real estate investors for a few reasons:
So, if you shouldn’t go with the typical way to name a trust (by naming it after your family name or address), what should you do, instead?
Come up with a list of creative trust names. We recommend that you name your land trust to sound like a fictional company. The only exception, though, is that you typically aren’t allowed to make your trust sound like a lender or other financial institution. You also need to avoid naming your trust after anyone else’s existing LLC.
But it’s important that you don’t get too creative, because you still want banks to be able to correctly categorize your trust based on its name alone. Some attorneys have even talked about clients naming their trusts after their dogs. You want to walk the line between clarity and anonymity.
When you name a trust, that name will be included when you name any asset in the trust. You can probably imagine how this could quickly spiral out of control if you choose a trust name that’s too long.
Celebrities work closely with attorneys to find ways that they can protect their anonymity from the public. This is a good idea for you, too. Land trust rental property should be used to shield you from possible litigation. As we mentioned in that article, no one wants to sue a ghost. The more obstacles you can set up, the more illusive you can be, the better.
At the end of the day, the best way to choose a trust name is to make sure that it protects your anonymity. If you’re having trouble coming up with a name that both suggests what the trust was set up to do and one that protects your anonymity, either consult with a professional or ask yourself which value is most important to you.
Most of the time, people would prefer to protect their privacy. Having documents clear through banks faster is simply a perk, and not something that you’re necessarily focused on when you’re setting up a trust. Liability and privacy, on the other hand? Those are essential.
What are the main points you need to know before naming a trust?
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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