Email FacebookTwitterMenu burgerClose thin

Can a Trust Buy Real Estate? Pros, Cons and Steps

Byline profile imageEdited by Becca Stanek
|
Byline profile imageEdited by Arturo Conde, CEPF®
Published on
| fact checked badgeFact Checked
SmartAsset maintains strict editorial integrity. It doesn’t provide legal, tax, accounting or financial advice and isn’t a financial planner, broker, lawyer or tax adviser. Consult with your own advisers for guidance. Opinions, analyses, reviews or recommendations expressed in this post are only the author’s and for informational purposes. This post may contain links from advertisers, and we may receive compensation for marketing their products or services or if users purchase products or services. | Marketing Disclosure
Share

A trust can buy real estate just like an individual or business can. In many cases, people title property in the name of a trust to efficiently manage assets, reduce probate exposure or maintain privacy. When a trust purchases a home, the trustee handles the transaction on behalf of the trust’s beneficiaries. The process is similar to a standard real estate purchase, though it requires documentation verifying the trust’s authority and purpose.

If you have estate or financial planning questions, consider working with a financial advisor with expertise in either area. Connect with an advisor for free.

What It Means to Buy a House Through a Trust

When a trust buys real estate, the trustee acts as the legal buyer, signing contracts and closing documents on the trust’s behalf. The funds for the purchase typically come from assets already held in the trust. That said, a trust can also secure financing if a lender is willing to approve a mortgage in the trust’s name. The property title lists the trust as the owner, which means any future sale or transfer must be conducted by the trustee according to the trust’s terms.

Once the purchase is complete, the property becomes part of the trust’s corpus, or body of assets. This allows for ongoing management under the trust agreement, such as determining who can live in the home, how expenses are paid and what happens to the property when the grantor dies.

Revocable living trusts give the owner flexibility to modify or sell the property during their lifetime. Irrevocable trusts, on the other hand, generally restrict such changes. In either case, the trust document and state property laws govern the the transaction and subsequent ownership.

Steps for Buying a House Through a Trust

A notebook reading "living trust or will?"

The process begins with reviewing the trust agreement to confirm that the trustee has the authority to buy and hold real estate. If this is the intent of the trust’s creation, an attorney or estate planner will draft it and appoints a trustee to act on behalf of the beneficiaries. The trust must also have a tax identification number, for use on financial and legal documentation during the transaction.

Next, the trustee makes an offer to purchase the property in the name of the trust. The purchase agreement, loan documents and deed should all reference the trust’s legal name and the trustee’s capacity. After closing, the title company records the deed showing the trust as the owner. Property insurance and mortgage accounts should also list the trust correctly to maintain continuity.

Finally, the trustee manages the property according to the trust’s terms, which may include collecting rental income, paying expenses or making decisions about future distribution.

Click Your State to Get Matched With Financial Advisors That Serve Your Area
Choose your state and answer some questions to get matched with up to three fiduciary advisors that serve your area.
ALAKAZARCACOCTDEFLGAHIIDILINIAKSKYLAMEMDMAMIMNMSMOMTNENVNHNJNMNYNCNDOHOKORPARISCSDTNTXUTVTVAWAWVWIWYDC

Can the Trustee Also Be the Buyer?

Yes, the trustee and the person purchasing the property can be the same individual, as long as they are acting in different legal capacities. For example, a person who creates a revocable living trust can name themselves as trustee and use the trust to buy a home. In that case, they are executing the purchase on behalf of the trust rather than as a private individual.

However, when the trustee and the grantor are the same person, the distinction must be documented clearly in purchase and title records. The deed should state that the property is acquired by the trustee for the benefit of the trust, not in an individual capacity. This places the home within the trust and subjects it to the trust terms.

Pros and Cons of Buying a House With a Trust

Buying real estate through a trust can offer meaningful advantages for estate planning and asset management. However, it also introduces added complexity and potential costs. Understanding the tradeoffs helps clarify whether this structure aligns with a person’s financial and legal goals.

Pros

  • Avoids probate. Property held in a trust can transfer to beneficiaries directly upon the grantor’s death, bypassing the often lengthy and public probate process.
  • Maintains privacy. Real estate owned by a trust keeps the owner’s name off of public property records, offering a degree of anonymity.
  • Supports incapacity planning. If the grantor becomes unable to manage affairs, the successor trustee can handle the property without court intervention.
  • Facilitates estate management. Multiple assets, including real estate, can be managed under one trust for easier recordkeeping and distribution.

Cons

  • Added setup costs. Establishing a trust and transferring property titles can involve attorney fees and administrative expenses.
  • Potential financing hurdles. Some lenders may be hesitant to issue mortgages to trusts, especially irrevocable ones.
  • Ongoing management duties. Trustees must maintain accurate records, pay property expenses and comply with the trust’s terms.
  • Limited flexibility in irrevocable trusts. After the property transfer occurs, the owner typically cannot make changes without beneficiary consent or court approval.

Bottom Line

A house with a sold sign out front.

A trust can buy and hold real estate, offering a structured way to manage ownership, transfer property and maintain privacy. While the process adds some legal formality and potential costs, it can simplify estate transitions and provide more control over the management or distribution of a property. For those who already have or are considering a trust, buying a home through it can be a practical part of a broader estate plan.

Estate Planning Tips

  • A financial advisor can help you review financing, affordability and how the purchase of a home fits within the trust. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • While it may be tempting to save some money and plan your estate by yourself, you should still be careful with these DIY estate planning pitfalls.

Photo credit: ©iStock.com/ArLawKa AungTun, ©iStock.com/designer491, ©iStock.com/gorodenkoff