Nominee Trust Definition With The
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FAQ
A nominee trust is a legal arrangement whereby a person, termed the settlor, appoints another person, termed the "nominee" or "trustee", to be the owner of the legal title to some property.
Living trusts, Totten trusts, and nominee trusts are the main types of revocable trusts. They can be revoked, amended, or terminated by the trust grantor, the person who creates the trust, any time before his or her death.
The trustee may have to file a return if the trust meets any of these: The trustee or beneficiary (non-contingent) is a California resident. The trust has income from a California source.
A nominee trust is typically established to hold title to real estate and is disregarded for federal income tax purposes (i.e., a separate return, such as a 1041, is not required).
Unlike a real trust, where the power and duty to appropriately control the trust property lies with the trustee, in a nominee trust the beneficiaries actually retain all decision-making power. In fact, the trustee is really just an agent of the beneficiaries, who essentially act as the principal.