How to Maintain Privacy & Protect Your Interests When You Own Property in Texas
Real estate privacy trusts (REPTs) can mask the individuals and businesses behind property transactions and real estate ownership in Texas, providing a powerful solution for maintaining anonymity in searchable, public records. Beyond the rich and famous, several parties can benefit from the privacy — and other advantages — provided by REPTs.
To help you determine if this estate planning tool is right for you and your needs, this guide breaks down some key definitions, issues, benefits, and more, including:
- Real Estate Privacy Trust Defined: What Are REPTs?
- Property Deeds & Public Records in Texas
- Exceptions to the Rule: Property Ownership Record Redactions (without a REPT)
- How Real Estate Privacy Trusts Work
- Benefits of Real Estate Privacy Trusts
- Who Can Benefit from a Real Estate Privacy Trust?
- Questions to Ask If You or Your Client Is Considering a REPT
- How to Find Out More About Real Estate Privacy Trusts
Real Estate Privacy Trust Defined: What Are REPTs?
Drafted as revocable living trusts, real estate privacy trusts are generally designed to:
- Hold various types of real estate: Residential and commercial property can be transferred into REPTs, making these trusts useful for both individuals and businesses.
- Name the creator of the trust (the grantor) as the beneficiary: If you establish a real estate privacy trust and you’re the beneficiary, you can set the terms of the trust and be the heir who “inherits” the property. This lets you maintain control over both the trust and the property without legally being recognized as the official property owner.
- Appoint a third party as the trustee: Whether a loved one, a friend, or a professional (like a lawyer or an accountant), the trustee of a real estate privacy trust will usually hold the property title, meaning that on paper — and in public records — the trustee will appear as the owner of the property, making searches through digital deed records for the true owner difficult.
This setup offers a unique level of privacy, protection, and flexibility with real estate transactions and ownership that otherwise would be difficult, if not impossible, to achieve in Texas.
Property Deeds & Public Records in Texas
When you purchase property, various real estate documents are publicly recorded, and there’s generally no way around that. In fact, anyone can use online search tools, like this Travis County property search tool, to discover details including (but not limited to):
- Property owner names
- The address of each property an individual or business owns
- The legal description of each property
- Geo-ID information for each property
That’s just what’s available from government websites. Several private companies provide access to public records and seemingly “private” information online, making it easy for anyone to:
- Search for any property deeds that list you or your business as an owner
- Find records such as property tax assessments, liens against your properties, and more
As convenient as it may be for some to access those records at their fingertips, it may also be unnerving, imprudent, or even unsafe for some parties to be so easily identified. That’s where real estate privacy trusts come in.
Exceptions to the Rule: Property Ownership Record Redactions (without a REPT)
Before getting into how real estate privacy trusts work, there is an exception provided by Texas law that is worth noting. According to Texas Property Code Section 11.008(j), specific law enforcement personnel and legal professionals (and their families) may be eligible to have their identifying information redacted (omitted) from certain online property records upon written request.
Specifically, Texas law currently states:
On receipt of a written request from a federal judge, including a federal bankruptcy judge, a marshal of the United States Marshals Service, a United States attorney, a state judge as defined by Section 572.002, Government Code, or a family member as defined by Section 31.006, Finance Code, of a federal judge, marshal, attorney, or state judge, the county clerk shall omit or redact from an instrument described by this section that is available in an online database made public by the county clerk, or by a provider with which the county commissioners court contracts to provide the online database, social security number, driver’s license number, and residence address of the federal judge, marshal, attorney, state judge, or family member of the federal judge, marshal, attorney, or state judge.
The bottom line is no one should assume they automatically have privacy when it comes to buying, owning, or selling property in Texas, especially if:
- They have never made a written request to have their information redacted from public records (if they’re legally eligible to do so under state law).
- They have not established a real estate privacy trust with the help of an experienced lawyer.
How Real Estate Privacy Trusts Work
Creating a real estate privacy trust generally involves:
- Drafting trust documents: Beyond detailing the individuals who serve in various roles associated with the REPT, the trust documents will also lay out any specific instructions for how the trustee is to administer the trust. Simply put, the grantor will outline the terms for managing the real estate privacy trust in the trust documents.
- The trustee signing the closing documents: Also named as grantee on the deed, the trustee will appear in searchable deed records. The grantor/beneficiary of the REPT will NOT. In fact, the grantor’s name only appears within the body of the deed of trust, meaning the grantor’s name will not be associated with the document in the county’s digital search engine. Notably, while there is no requirement that deeds of trust are recorded in the county records, they often are. Mortgage companies usually insist on this to preserve their rights. Still, the owner’s name would NOT appear as a grantor or a grantee in the database.
- The grantor retaining the right to remove and replace the trustee: The grantor always retains the right to remove and replace the trustee. This flexibility permits the grantor to keep the third-party trustee in place to pay monthly or annual expenses and taxes associated with the property. The grantor may replace the trustee at any time, including naming the grantor as the successor trustee or co-trustee if the concern for privacy abates in the future.
- The grantor retaining the right to change or terminate the trust at any point after its creation: Since REPTs are a type of revocable living trust, they can be amended at any time while the grantor is still alive (and of sound mind). Anything from the terms of the real estate privacy trust to the trustee(s) and/or the beneficiary or beneficiaries can be changed by the grantor, at the grantor’s discretion. That also means grantors can decide to terminate (end) these trusts if they’re no longer needed in the future.
Benefits of Real Estate Privacy Trusts
As the name implies, real estate privacy trusts offer a solution for creating and maintaining privacy around certain real estate transactions and assets. While some may take that to mean that REPTs have very limited applications, the truth is that real estate privacy trusts can offer distinct benefits and major advantages in a myriad of situations, as well as for various needs and objectives.
Some of the benefits of real estate privacy trusts include:
- Privacy: Grantors of REPTs can buy, sell, and own property anonymously, transferring that property in and out of the trust as necessary. With the trustee holding legal ownership in trust, grantors can preserve anonymity and priceless peace of mind with their real estate holdings and dealings while still maintaining control and claiming homestead rights on their residence. Though closing documents for REPTs are public record, the true owner of the property will not appear as grantor or grantee on any deed or in the county’s searchable database. That obfuscates the true owner’s location from online sleuths.
- Flexibility: REPTs provide a flexible option for discretely transferring property to new beneficiaries while still keeping the names of those beneficiaries out of the public record. A third party trustee can be used at closing to sign all documents. If the owner later desires to replace the trustee, this is easily accomplished without drawing attention to the property.
- Probate avoidance: With REPTs, grantors can name new (and/or contingent) beneficiaries at any time, which means the property bypasses probate and transfers directly to the named beneficiaries when the grantors pass away (if they are still beneficiaries at the time of the grantors’ deaths).
- Tax advantages: Depending on your circumstances, transferring property into a real estate privacy trust could make or keep you (or your business) eligible for certain tax advantages.
Who Can Benefit from a Real Estate Privacy Trust?
Any individual, business, or organization that would like to privately own and/or transfer property in Texas may benefit from creating a real estate privacy trust. In practice, that may include (and is by no means limited to):
- Celebrities, their family members, and/or members or their entourage
- High-net worth individuals
- Domestic abuse survivors
- Public or government officials
- Real estate investors
- Anyone who wishes to remain anonymous for any reason at all
Questions to Ask If You or Your Client Is Considering a REPT
The following questions can help prospective property buyers, as well as property owners, businesses, and the professionals who assist them, figure out when it may be useful to seek out more information about real estate privacy trusts:
- Do I want the property I own, including my name and address, to be readily available via public records?
- Would I be safer or have more peace of mind if I were not listed as the legal owner on searchable public records?
- Do I need financing for the property I want to buy and transfer into a REPT? Note: some lenders may require that an individual, not a trust, hold the property as a contingency for financing. In those cases, there may be some additional steps to take when setting up a REPT.
Discussing these issues with a lawyer can clarify the potential benefits of real estate privacy trusts and whether they may be right for you.
How to Find Out More About Real Estate Privacy Trusts
Confidential answers and advice about real estate privacy trusts await you in a zero-cost, 100% confidential consultation. Talk to an Austin real estate privacy trusts lawyer now, and discover what you may stand to gain from an REPT.
Todd A. Wilson
Todd A. Wilson has been practicing law since 2007 with a view to educate all strata of society on the importance of planning their estates and probate administration.