A nominee trust is a trust in which the trustee holds legal title to the trust property for the trust's beneficiaries, but the beneficiaries exercise the controlling powers, and the actions that the trustees may take on their own are very limited. Such trusts are a common device for holding title to real estate, and afford certain tax advantages. A nominee trust is not a trust in the strict classical sense, because of the trustee-beneficiary relationship. Despite a nominee trust's nontraditional relationship between trustee and beneficiary, such a trust must still adhere to the rule that no trust exists when the same individual is the sole settlor, sole trustee, and sole beneficiary. The trustees of a nominee trust act at the direction of the beneficiaries.
Delaware Nominee Trust: Understanding its Definition and Different Types The Delaware Nominee Trust is a legal entity commonly used in Delaware law known for its flexibility and benefits it offers to its beneficiaries. It serves as a frequently utilized instrument for various estate planning strategies, protecting privacy, and holding assets effectively. Created under Delaware's statutory trust laws, the Delaware Nominee Trust is versatile and offers numerous advantages. A Delaware Nominee Trust is established by designating a trustee or trustees who hold legal title to specific assets on behalf of one or more beneficiaries. The trustee manages the assets in accordance with the trust's terms, which are laid out in a trust agreement. The beneficiaries enjoy the rights to the trust's income and principal as dictated by the trust agreement. Benefitting from the tax efficiency Delaware offers, the Delaware Nominee Trust has become a popular option for many individuals and businesses. It allows for the avoidance of probate, offers increased privacy as trust documents are not generally available to the public, and provides significant flexibility in managing and distributing assets. Different Types of Delaware Nominee Trusts: 1. Revocable Delaware Nominee Trust: Also known as a "living trust" or "inter vivos trust," this type of Delaware Nominee Trust can be amended, modified, or revoked by the granter during their lifetime. It offers the benefit of avoiding probate and ensuring a smooth transfer of assets upon the granter's death. 2. Irrevocable Delaware Nominee Trust: Unlike a revocable trust, an irrevocable Delaware Nominee Trust cannot be changed or revoked once established. As a result, it can provide more extensive asset protection and tax benefits. An irrevocable trust can be used for various purposes, including asset preservation, charitable planning, or Medicaid planning. 3. Delaware Dynasty Trust: This special type of Delaware Nominee Trust allows for the preservation of wealth and assets for multiple generations. It shields assets from estate taxes, ensuring their longevity and enhanced financial security for beneficiaries in the future. 4. Delaware Statutory Trust (DST): A Delaware Statutory Trust is a type of Delaware Nominee Trust commonly used in commercial real estate investing. It allows investors to pool their funds and invest in larger properties as fractional owners. DST's offer tax advantages, limited liability, and flexibility in diversifying investment portfolios. 5. Delaware Asset Protection Trust: Often utilized for asset protection purposes, this trust shields assets from creditors, providing an additional layer of security. It allows individuals to protect their wealth and guard against potential lawsuits or creditors seeking claims. By understanding the various types of Delaware Nominee Trusts available, individuals and businesses can choose the option that best suits their specific needs. Whether aiming for estate planning, privacy, asset protection, or investment purposes, Delaware Nominee Trusts offer a flexible and advantageous framework within Delaware's legal system.
