Trusts Involved in More Than a Quarter of Manhattan Resi Deals

Manhattanites are growing increasingly reliant on parents purchasing or passing down properties to them.

Last year, the share of Manhattan home sales involving trusts leaped to 28 percent, Bloomberg reported, citing data from Attom. Three years ago, those transactions represented 17 percent of transactions.

The use of trusts isn’t exclusive to deals involving parents and children, but it is a common tactic seen by brokers and wealth advisors. Trusts are preferred as a vehicle to pass wealth from parents to children, as they can help families lessen or dodge estate taxes when a person dies, as well as limit exposure to gift tax rules.

The reasons for the dramatic increase in trust purchases are myriad. A few include the fact that tax and transparency laws are changing rapidly, as well as that a huge wealth transfer is unfolding across the country.

The most obvious reason for the activity, however, is the exorbitant price of homes in Manhattan; the median sales price in the borough was $1.1 million, according to Miller Samuel.

“It’s hard to be self made and buy property without generational wealth,” Serhant agent Peter Zaitzeff told Bloomberg. “You need to make or have a lot of money to be here.”

One luxury broker for Douglas Elliman reported that as much as 60 percent of her sales last year involved parents buying for children and 40 percent of those deals featured trusts, which also offer the opportunity for more anonymity than limited liability companies in the state.

There are specific neighborhoods where trusts are more present, though no neighborhood is immune. A third of condo sales involving trusts in Manhattan last year unfolded in Soho, Tribeca and the West Village, according to Attom.

The trend likely won’t end soon as New Yorkers without generational wealth continue to be priced out of the market. A recent report from Knight Frank found that inheritors of massive wealth are interested in luxury real estate more than anything else.

— Holden Walter-Warner