Nearly 75% of home purchases in a Bay Area city were made by LLCs or trusts. It is a trend among the wealthy.
Only two out of 1[ads1]2 properties on a block in Atherton, California are owned by individuals.
The city near San Francisco is, on average, one of the wealthiest areas in the country.
It’s also part of a trend that has seen wealthy Americans create trusts or LLCs to buy homes.
On any given block in the city of Atherton, California, more than half of the homes are likely to be owned by a trust or LLC rather than an individual—part of a growing trend among America’s wealthiest cities.
About 72% of home purchases in the 94027 zip code, which includes most of Atherton, were made last year through trusts or LLCs, according to data from the real estate website Redfin cited in a recent report by the San Francisco Chronicle. Atherton, located between the tech hubs of San Francisco and Palo Alto, has ranked as one of the wealthiest areas in the country for several years in terms of both average household income and most expensive real estate transactions and listings.
Atherton is also home to some of the nation’s wealthiest people, from NBA stars like Stephen Curry to venture capital and technology executives like Marc Andreessen and Larry Page.
It is also a good example of a new trend among the country’s wealthiest home buyers, according to the Chronicle. The 72% mark is the highest percentage of LLCs and trusts in 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 report, only two of the 12 homes are actually owned by individuals, while the rest are owned by trusts, LLCs or other types of corporations. While it’s common to use trusts or LLCs to buy properties that you intend to rent out to other people, they can also provide other protections when you’re buying a home that you intend to live in yourself and keep in your family.
“If someone creates a trust, it’s almost like a company that continues to live outside of the person,” Michael Repka, CEO and managing broker for DeLeon Realty, told the San Francisco Chronicle.
A Redfin economist told the Chronicle that one of the main reasons for the use of trusts is how much easier it makes the inheritance process, since using a trust can often help a homeowner’s beneficiaries inherit a property without spending time in probate court.
Experts also said because they can be named anything, using a trust or LLC can give public figures, like Atherton resident Curry, added privacy so that a home isn’t just registered under one person’s name.
Read the original article on Business Insider