The unique needs of high-net-worth individuals and their families necessitate a nuanced understanding of the legal landscape, especially when acquiring residential property and setting up a household. There are several compliance risks that individuals and their advisors should approach carefully, including these key areas:
USING TRUSTS AND OTHER PRIVACY STRUCTURES TO ACQUIRE PROPERTY
With the volume of data available on the internet, there is an increased desire for an opaque structure to acquire and own a family residence to maintain private the home address or ownership. While these “blind trusts” or “nominee” arrangements have long been used, the complexity of the structures has grown substantially. In these arrangements, an individual or entity holds title to real property as a matter of public record for the benefit of the true owner, taking action at the authorization of the true owner, and are best utilized at the initial inception of when the property is being purchased. However, the efficacy of the privacy maintained by such an arrangement requires all parties involved in the real estate acquisition to maintain and respect the privacy structure on an ongoing basis, including with respect to maintenance of the property (e.g. taxes, insurance, utilities and bills, subscriptions, and deliveries).
Several new reporting requirements effective in 2024 and 2025 are implicated where a trust or entity is used to acquire and own real property. This includes the federal Corporate Transparency Act, which requires that certain entities report information about their beneficial owners and those individuals who have substantial control of the entity to FinCEN, as well as new anti-money laundering regulations for residential real estate transfers effective December 1, 2025, which require reporting of residential real estate transactions gifted to or purchased by a trust or a legal entity (such as a corporation, partnership or LLC) in an “all cash” purchase…
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