What Do We Do If Schedule of Beneficiaries for Realty Trust is Missing?
The schedule of beneficiaries on our nominee realty trust is missing. I am the trustee and want to sell property. Proceeds are directed to go to a church. I can’t seem to get a straight answer on how to proceed.
Unfortunately, it’s not uncommon for schedules of beneficiaries of nominee realty trusts to go missing. By design they’re not recorded at the registry of deeds, clients often don’t understand their significance and misplace correspondence with their attorneys, and lawyers are not always as good at keeping records as they should, or they retire and their files become unavailable (an argument for not working with solo practitioners, but that’s another topic). For those not familiar with nominee realty trusts, they are an estate planning and real estate ownership tool primarily used in Massachusetts. Courts have described them as having some aspects of a trust but to be more like an agency agreement.
Under the standard nominee realty trust, the trustee or trustees hold title to real estate, but other than everyday functions of maintaining the property, such paying taxes, they cannot act without the direction of the beneficiaries named on a separate schedule of beneficiaries. For instances, as trustee you cannot sell the property unless the beneficiaries direct you to do so. While the deed of the property to the trust along with the trust or a trust certificate are recorded at the registry of deeds, the schedule of beneficiaries is not. This way the identity of the true owners of the property can be kept anonymous. Or, if there are several owners, one or two can be designated to hold title and deal with the everyday management of the property.
Nominee realty trusts were adopted as standard tools in Massachusetts because the state was late to permit transfers to trusts without recording the entire trust at the registry of deeds. Since trusts can be dozens of pages long, recording them could be expensive and doing so would make the individual’s entire estate plan public. Further, if the trust were amended, the amendment would also have to be recorded at the registry. As a work around, Massachusetts attorneys adopted the nominee realty trust. Now, Massachusetts has joined the rest of the country in no longer requiring the full trust to be recorded, permitting simply a short trustee’s certificate providing certain information about the trust. However, a lot of nominee realty trusts still exist and since Massachusetts attorneys are familiar with the device, they still use them in some cases.
Unfortunately, for the reasons listed above, schedules of beneficiaries often go missing. Our solution in these situations has been to create a new schedule of beneficiaries that reflects what the family believes was intended in the first place. This works is everyone is on the same page. It does not if they can’t agree. In that case, you may need to seek mediation or go to court and ask for instructions.