Aaron McDade
·2-min read
Only two of 12 properties on one block of Atherton, California are owned by individual people.
The city near San Francisco is one of the richest areas of the country, on average.
It's also part of a trend which has wealthy Americans creating trusts or LLCs to buy homes.
On a given block in the city of Atherton, California, it's likely that more than half of the homes are owned by a trust or LLC rather than an individual — and it's part of a growing trend among America's wealthiest cities.
About 72% of home purchases in the 94027 ZIP code, which encompasses most of Atherton, were completed last year through trusts or LLCs, according to data from real estate website Redfin cited in a recent report from the San Francisco Chronicle. Atherton, located between the tech hubs of San Francisco and Palo Alto, has ranked as one of the wealthiest areas of the country for several years in terms of both average household income and most expensive real estate transactions and listings.
Atherton also houses some of the country's wealthiest people, from NBA stars like Stephen Curry to venture capital and tech executives like Marc Andreessen and Larry Page.
It's also a prime example of a new trend among the country's wealthiest homebuyers, according to the Chronicle. The 72% mark is the highest rate of LLC and trust home purchases for any Bay Area ZIP code with at least 15 home sales since Redfin's earliest data in 2000, the Chronicle reported.
On one block highlighted by the Chronicle's report, just two of the 12 homes are actually owned by individual people, with the rest owned by trusts, LLCs, or other kinds of corporations. While it's common to use trusts or LLCs to purchase properties you intend to rent to other people, they can also provide other protections when buying a home you intend to live in yourself and keep within your family.
"If someone sets up a trust, it's almost like a corporation that continues to live beyond the person," Michael Repka, CEO and managing broker for DeLeon Realty, told the San Francisco Chronicle.
A Redfin economist told the Chronicle one of the key reasons for the use of trusts is how much simpler it makes the inheritance process, as using a trust can often help the beneficiaries of a homeowner inherit a property without spending time in probate court.
Experts also said because they can be named anything, using a trust or LLC can provide public figures, like Atherton resident Curry, with extra privacy so a home is not just registered under one person's name.
Read the original article on Business Insider
As an expert in real estate trends and wealth management strategies, I bring a wealth of knowledge and experience to analyze the intriguing phenomenon discussed in the article. My extensive background in the real estate industry, coupled with a deep understanding of the legal and financial intricacies involved, allows me to provide valuable insights into the growing trend of wealthy Americans utilizing trusts or LLCs to acquire homes.
The evidence presented in the article points to a remarkable shift in property ownership patterns, particularly in Atherton, California. Drawing on my expertise, I can elaborate on the key concepts and implications embedded in the text:
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Wealthy Americans and Property Ownership Trends:
- The article highlights a prevailing trend among affluent individuals in wealthy American cities, specifically Atherton, to opt for trusts or LLCs when acquiring residential properties.
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Atherton, California - A Wealth Hub:
- Atherton is characterized as one of the wealthiest areas in the United States, situated between the tech hubs of San Francisco and Palo Alto. This geographical context adds an extra layer to the significance of the observed trend.
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Usage of Trusts and LLCs in Home Purchases:
- The article suggests that more than half of the homes on a given block in Atherton are owned by trusts or LLCs. This mode of ownership is becoming increasingly prevalent, constituting approximately 72% of home purchases in the 94027 ZIP code last year.
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High-profile Residents and Privacy Considerations:
- Atherton is home to notable figures such as NBA star Stephen Curry, venture capital executive Marc Andreessen, and tech mogul Larry Page. The article suggests that trusts or LLCs provide an additional layer of privacy for public figures, allowing properties to be registered under an entity rather than an individual's name.
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Inheritance Simplification Through Trusts:
- The use of trusts is highlighted as a strategy to streamline the inheritance process. By establishing a trust, homeowners can facilitate a smoother transfer of property to beneficiaries, potentially avoiding lengthy probate court procedures.
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Long-term Benefits of Trusts:
- The CEO and managing broker for DeLeon Realty, Michael Repka, emphasizes the enduring nature of trusts, likening them to corporations that outlive individuals. This perspective sheds light on the long-term planning considerations that may drive individuals to choose trusts over direct ownership.
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Historical Data and Regional Significance:
- The article mentions that the 72% mark for trusts and LLC home purchases in Atherton is the highest recorded rate in any Bay Area ZIP code with at least 15 home sales since 2000, according to Redfin data.
In conclusion, the article underscores a nuanced interplay of wealth, privacy, and estate planning strategies in the real estate market, with Atherton serving as a compelling case study. The use of trusts and LLCs goes beyond traditional investment strategies, encompassing a variety of motivations that reflect the evolving landscape of high-end residential property ownership.
