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Question:

In Massachusetts, does the schedule of beneficiaries have to be signed by the beneficiaries?

Response:

Typically, yes. But there’s actually no law on this. So the answer depends on the terms of the nominee trust agreement and the typical forms do require that the beneficiaries sign the schedule. This makes sense since the trustees are essentially agents of the beneficiaries who are the beneficial owners of the property.

A little background may help explain this. While called “trusts,” nominee realty trusts are a hybrid of standard trusts and agency agreements. The trustees of the nominee realty trust hold title to the property and can take certain actions with respect to it, for instance, renting it out to tenants and paying maintenance costs and taxes. Typically, they cannot engage in major activities, such as taking out a mortgage or selling the property, unless instructed to do so by the beneficiaries.

The beneficiaries are not listed in the nominee trust agreement itself, but instead on a separate schedule of beneficiaries. The schedule is not recorded at the registry of deeds when there’s a property transaction involving the trust. This way, the identities of the owners can be kept private. In addition, changes in the underlining ownership can occur without the necessity of recording a new deed each time a transfer occurs. For instance, parents may want to give ownership of a vacation home to their children over time and can facilitate this be updating the schedule of beneficiaries.

For historical reasons, nominee realty trusts are used primarily in Massachusetts, but less today than in the past. Both because people often misunderstand how they work and because many of the existing nominee realty trusts are old, the schedules of beneficiaries often go missing. If you are the trustee or beneficiary of a nominee realty trust, make sure you have a copy of the schedule of beneficiaries.

Since the beneficiaries are the true owners of property in nominee realty trusts, and the trustees can only take major actions upon their direction, it makes sense that they all sign the schedule of beneficiaries. However, presumably the trust could permit the trustees to sign the schedule on behalf of the beneficiaries. So, the ultimate answer is that you have to look at what the trust agreement says.

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Does Nominee Realty Trust Pass Through Probate? Does Trustee of Nominee Realty Trust Need Beneficiary’s Approval to Sell Real Estate? What Do We Do If Schedule of Beneficiaries for Realty Trust is Missing?