New reporting requirements mean the financial structure is no longer a reliable way to hide who owns a property
CONGRATULATIONS ON FINDING your dream home. As you prepare to close on the deal, you’re likely vetting potential movers, interior designers and landscapers. But have you determined the best way to hold title to the property?
Most buyers don’t even consider this issue and take title in their own names, either as sole owner, joint tenants with right of survivorship, or as tenants in common (for co-owners with no right of survivorship). Married couples often own as tenants by the entirety, which gives each spouse an equal and undivided interest in the home and includes survivorship rights.
But celebrities and high-net-worth buyers often turn to other options. “Entities such as trusts, family limited partnerships or limited liability companies are preferred for several reasons,” said Paul Krasker, a real-estate attorney in West Palm Beach, Fla. “Confidentiality is at the top of the list, estate-planning concerns are secondary, and then homestead and liability concerns.”
Confidentiality is the reason many celebrities use LLCs to own their homes, since that allows them to shield their identity and avoid having their true name and home address posted in county registries, which are easily accessible online in many states. But due to new laws designed to crack down on money laundering and tax evasion, buyers may find that even an LLC doesn’t protect their personal information from disclosure these days.
“Anonymous shell companies have been used to launder money by a variety of nefarious actors, and it’s been identified as a key national security and corruption risk,” said Ian Gary, executive director of the Financial Accountability and Corporate Transparency Coalition, which seeks to combat the impacts of corrupt financial practices.