3 Steps to Use an Anonymous Trust to Hide Company Ownership

by | BiggerPockets.com

[Disclaimer: This article does not constitute legal advice. To set up legal entities for your real estate business, be sure to consult an attorney who understands laws specific to your area.]

Some people get offended when we start talking about anonymity and immediately go on the defensive. So if you’re reading this, thinking about how you have nothing to hide and what an upstanding citizen you are, don’t stop here. We’re sure that you are honest, smart, and probably incredibly good-looking. Anonymity has nothing to do with all of that, so read this very carefully: The main reason you want to hide company ownership is to prevent lawsuits. With that being said, the purpose of this article is to introduce the concept of anonymity and one of the most effective tools for protecting your anonymity—the anonymous trust. The anonymous trust can be extremely effective at preventing you from being sued when setup right.

In fact, this is one of many tools used by the fabulously wealthy to protect their assets. You may not be there yet, but walk the walk, and you’ll be part of the way to doing as they do in other respects.

Here’s three simple steps you can follow to hide company ownership and prevent lawsuits!

Download Your FREE copy of ‘How to Rent Your House!’

Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.

Click Here For Your Free Guide to Renting Your House

3 Steps to Use an Anonymous Trust to Hide Company Ownership

Step #1: Form an anonymous trust.

The series LLC reduces your liability exposure, which effectively limits the potential damage a lawsuit can do to you. What it doesn’t do is stop the lawsuit from happening in the first place. On the other hand, an anonymous trust can! If you truly want to make your company litigation proof, you need an anonymous trust.

Related: The Pros & Cons of Using a New LLC for Every Property Purchase

The probability of a lawsuit happening is based on three separate components: legal, factual, and financial. An anonymous trust will attack each of those motivating factors. What this does is reduce the chance of a lawsuit happening in the first place.

Step #2: List your anonymous trust as a member.

Yes, believe it or not, you can do that, at least in America. (Remember, you have several options when it comes to structuring your business assets.) Anyway, in the case of anonymity, we want to target the financial component of a lawsuit.

Why? Because lawsuits only happen when a plaintiff believes they have a reasonable case for seizing assets to cover damages. If there’s nothing they think they can seize from you, they won’t sue you.

The anonymous trust structure enables you to hide company ownership by listing your company as a member in your LLC’s articles of incorporation. Another advantage of an anonymous trust is that you don’t have to file it with the state—which means the people who want to sue you won’t be able to access your ownership information in the public records.

There will be nothing to associate the assets with your name, shielding you from potential legal action.

Step #3: Allow uncertainty to work its magic!

To be perfectly blunt, people sue you because they want your money. Most of the time, the people suing you have little to no money in the first place. And if they don’t have enough money, they can’t pay a lawyer to sue you.

People usually get around this obstacle by offering their lawyers part of the settlement. That means it’s up to a lawyer whether or not you get sued. How does the lawyer make that decision? It’s got nothing to do with affection for the client, merits of the case, or the goodness of their hearts. (Yes, contrary to popular belief, attorneys do indeed have hearts.) It comes down to the numbers: how much cold hard cash will be in it for them.

If a lawyer is uncertain about whether you own assets worth anything, they won’t waste their time trying to sue you. After your anonymous trust is in place, it will be next to impossible for someone to determine what you own.

Related: Can Investors & Landlords Own Real Estate Anonymously (Or is Privacy Dead)?

No lawyer is going to spend months or years trying to figure out what you own, period. I should know—I loved a good lawsuit earlier in my career. But at no point in the practice of me or anyone at my company have any of us wasted time on skip-tracing without a guaranteed payday. And hey, even though we have hearts, lawyers have to eat too.

In short, an anonymous trust can keep your hard-earned assets from becoming our next meal.

Investors: How do you protect your assets? Do you use an anonymous trust or something else?

Let’s discuss!

About Author

Scott Smith

Scott Smith helps clients nationally and internationally from his office in Austin, Texas. With over 5 years experience in the litigation, Scott works on proactively building defense in anticipation of future lawsuits for real estate investors. Scott is one of the few attorneys in the nation that structures companies for maximum protection with minimum taxes.

What You Want the Text to Say


  1. Great post!! Been there, done that, got the T-Shirt! Had to close one my first companies and file Chapter 7 because of a lawsuit filed under that exact scenario except for one difference…their attorney was a relative of the plaintiffs. At the first day of trial, they(husband and wife) sat in defiance of acknowledging their own signatures on each of nine pages of a contract and 4 signed milestone approvals even though they perfectly matched two checks also in play. I saw right then and there it was going to get ugly expensive with the crap attorney I had. I subsequently discovered a Harvard Review article that explained that the number one reason that small businesses closed was lawsuits because statistically 78% of suits are settled out of court with attorneys getting a 30% cut of the settlement. It’s a ‘ best practice ‘ for them.

  2. Interesting teaser Scott. I am in the early stages of looking into Land Trusts for the same anonymity protection. Is that the best structure for SFR rental owners? Would one land trust be set up to hold multiple LLC’s as beneficiaries/members?

    • Scott Smith

      Hi Karen, I’m really sensitive to doing promotion online since I’m just here to offer content. If you want to inbox me I can connect you with someone that can help you, or if you want there are a few people you are able to find online by searching Land Trusts. Total costs should be around $300 to $500 to include the land trust and the deed to transfer the property into it.

  3. Ali Hashemi

    Great article Scott! I’ve always wanted to structure my businesses as anonymously as possible for those exact reasons. I second @Karen Parker ‘s questions as to what the steps are. Maybe a follow up article?

    What are the typical costs associated with something like this?

    • Scott Smith

      Hi Ali, I’ll be sure to post more on this topic since it has been a lot of interest and generated some controversy, which is GREAT that everyone is so engaged about it. See my comment to Karen’s post on more info about set ups and costs.

  4. Jerry W.

    OK Scott I am throwing in the bullshit flag on this one. If someone is truly injured because you have something wrong on your property they are going to sue. First they will look for insurance. Then they will look for equity in the property, if either are present then they will keep going if you have had the property and siphoned off the majority of the equity through a mortgage then they follow the money until they find where it went and sue there for under capitalization. You cannot make property litigation proof. If you made that claim in Wyoming I would probably file a grievance on that statement alone. It is very easy to follow money with interrogatories and depositions. Your suggestions that this type of trust stops lawsuits it pretty misleading. As a practicing attorney I am pretty appalled. I live in Wyoming and we have some very strong LLC protection laws compared to most states. Are you suggesting having no liability insurance to keep folks from suing? If you have someone die from carbon monoxide poisoning due to screwing up the furnace venting they will find out who the principals are and sue them. You have not mentioned how you must turn over all control to other folks in order maintain your supposed anonymity. If you are managing the property you will be named in the suit and deposed and guess what they will ask you who the owners are. It is obvious you must be selling this secret sauce to be recommending it so strongly. The odds in my area of getting sued are extremely slim if you manage decently, in fact you have a much higher chance of having an insurance claim event like wind damage, hail damage, fire, flooding, etc rather than being sued. I have been in a few suits, not a lot, but have never seen anyone keep ownership anonymous for very long at all. If you get caught lying in discovery you will not only end up writing a very big check and losing your corporate protection you might end up in prison.
    Bad article I think it is highly misleading. I hope no one pays you money to set this up for them based on this kind of misleading information. You have left out a lot of information here.

    • Steve Vaughan

      I was thinking the same thing, just not as eloquently as you, Jerry.
      Unless you purchase this way, you will be in the title chain with a transfer anyway. Anonymity is tough that way.
      I have seen folks have difficulty even proving they own the asset when time to sell when they over-sophisticate this stuff.
      What asset type is this recommendation for? Little houses with debt? 100 unit apt buildings?
      At what cost? $7k? 15?
      I’m leaving with more questions than answers.

      • Scott Smith

        Hi Steve,

        I will be putting out more content to answer the questions you point out here as well as the other people who have commented. There is a good and efficient way to do this, and a complicated and inefficient way. So, the experience of doing them is important when looking for help.

        I find that typical land trusts and deeds cost anywhere between $300- $500 from looking at the marketplace and providers. The same trust structure can be used for any real property asset.

        • Don Ireland

          For something like this to really be effective, I believe I’d have to take title directly in the name of the trust. Thus way my name would never appear in the title history. If someone sees that I transferred title to the trust, a half-decent attorney could EASILY deduce that I am most likely still part of the trust.

          But if my name is not listed, that would not be an issue. However, if I am the grantor od thr trust (the one that created the trust), the Trustee and the beneficiary then that would create a MERGER issue. If MERGER becomes an issue, a judge would most likely set aside the Trust and declare that *I* own the property directly.

          Now it is true that I ultimately want the LLC to be the beneficiary of thr trust. But if I’ve got a loan in place, if/when the lender asks, I’ve got to produce documentation telling them under oath that I am the owner. Going back to that half-decent attorney again, I’m sure that he’d get a court order instructing the bank to produce documentation as to who owns the property.

          So if I am the Grantor, the attorney proves that I am (or at least WAS) the beneficiary and I am the Trustee, that would be thr definition of MERGER.

          All that is why I need somekne other than myself to act as trustee. The people I know do not understand structures like this and would not make good trustees.

          So I would need to find an attorney who understands such a structure and will act as my trustee.

          In addition, I contacted your law firm a few months ago and was quoted a price of $1500 to set it up and was told that would only include NOMINEE TRUSTEE service (meaning the trustee would design leaving me to find my own trustee).

          That’s a LOT more than the 300-500 you mentioned here.

    • Scott Smith

      Hi Jerry,

      First off, thanks for the great comment on the concerns addressed here. First off I want to say that you laid out a bunch of great information here that I agree with 100%. Thanks for engaging in the discussion. To get to a point of real understanding and even have a chance of coming to an agreement I think we need to have a serious and pointed conversation for 1 hour +. What’s really great here is that you are pointing out a ton of the great issues and questions that come up with anonymity that I’ve had to work through over the years!

      There is definitely limitations to how much anonymity protects, and I always recommend being well insured and using anonymity structures in conjunction with LLC protections.

      Can you private message me and let’s have that conversation.

  5. Scott Smith

    Hi Jerry,

    First off, thanks for the great comment on the concerns addressed here. First off I want to say that you laid out a bunch of great information here that I agree with 100%. Thanks for engaging in the discussion. To get to a point of real understanding and even have a chance of coming to an agreement I think we need to have a serious and pointed conversation for 1 hour +. What’s really great here is that you are pointing out a ton of the great issues and questions that come up with anonymity that I’ve had to work through over the years!

    There is definitely limitations to how much anonymity protects, and I always recommend being well insured and using anonymity structures in conjunction with LLC protections.

    Can you private message me and let’s have that conversation.

  6. Jerry W.

    Wow Scott you have a thicker skin than me. I would have probably flamed back if I thought I was right. Thanks for being so civil. I will make you a deal. You stop saying you can make a company litigation proof and we can have a conversation about this. I will absolutely swear you cannot stop a lawsuit from going against one of your properties because you have a trust. There is no such trust in my state or several others I have looked into called an anonymous trust. They are just a trust. you can choose to not list who the settlor is or even who the beneficiaries are to buy or sale property, but you must list a Trustee who is authorized to operate the trust business. That is where discovery starts if needed. Title companies only usually require that you submit enough of the trust document to show you are the Trustee and that you have powers granted that allow you to buy or sell the real estate. Usually only to sell it. In my state undercapitaization, usually done by stripping out the equity, is grounds to pierce the veil. A trust does not provide you any protection from a lawsuit. They literally are an alter ego, you usually file all your taxes from them under your personal return. Now I have read the lawsuits, in fact I read one tonight where a woman got $112 million for having a bus stop collapse on her crippling her for life. She was a dancer. If you had a $100 million in assets you could have used a blind trust to hide your assets but would have had to have turned over control to someone else. If that was a rental house and your LLC owned it they would have been sued. If you personally managed it but had the LLC ownership in a trust they would still find it. They would still find you. If that property was worth $1 million but you had taken out a loan for $800K on it there would be a deposition to find out where that $800K went. Trusts do not have to be registered with the state because they are just your alter ego, and they do not provide any protection from suit under the law. Please feel free to show me where I am wrong in all of this. I promise I will be more civil. Please reply how they stop this suit. If it is legal and ethical and fool proof there is no harm in putting it out here in print.

    • A anonymous trust is a land trust. Your name is never recorded anywhere on deed or at a courthouse, the trustees name is and you fire the trustee the same day the deed is recorded. Then there is no record as to who the new trustee is at the courthouse. You can sue the listed trustee, but that trustee does not know who the new trustee is or even who the owner of the property is. You can use or create a management company to make tax payments and rent the property for you.

  7. Unless you purchase this way, you will be in the title chain with a transfer anyway. Anonymity is tough that way.
    Great info, I’ve never heard of an anonymous trust but I’ll definitely be looking into it.

  8. Tim Daunch

    Scott & Jerry,
    Great debate. First, I’m not an attorney, so my experience is limited to my own. Jerry, you appear to be coming at this from the viewpoint of a “legitimate” plaintiff, i.e., someone who has truly been injured and likely deserves compensation. But what about the “opportunists” (and there are plenty in certain demographics) who see some ice, manufacture a fall and assc. injuries, and roll the dice for 2/3 of whatever their ambulance-chasing atty can recover? I think Scott’s commentary and approach addresses these situations.

    Maybe it’s impossible to make yourself litigation-proof, but I wonder if it dissuades the lazy money grabbers? Kinda like having a security co. sign, good lighting, and a barking dog at your house – a criminal will likely move on to easier pickings.

    • For those with a fewer rather than larger single family home portfolio, don’t underestimate the peace of mind an appropriately sized umbrella policy brings to the landlord policy on the properties. In my case, the umbrella has been way more coverage for a lot less money than trying to upsize the coverage on the individual property’s policy or pay an attorney to block. The insurer does the battle for you in those instances.

      Of course there’s no protection in those for legitimate actions based on civil rights, tenant laws, etc contained within legislated tenant protections. The opportunists are a whole other issue that even an LLC in my state doesn’t initially protect from without at least a couple of court visits and the associated costs.

  9. Dan Rillahan

    Hi Scott: Thanks for the article.
    Question?? A friend of mine is retiring soon and he wants to ensure his income property is protected. He wants to protect the property for his daughter (in case he becomes incapacitated); the Government (long term care) or others, such as his ex-wife or his daughter’s future boyfriends or husbands. He’s 62 years old his daughter is 22ish. He would like to maintain control and use the income until his passing.. Thanks for your time.

    • Curt Smith

      Dan, estate planning actually is a bit more complicated than first look. Yes it starts with all properties put into trusts with benefical interest being an LLC. A complete estate plan includes an entity called a Living Trust, which may be a member of the LLC that kicks in per the conditions set forth in the living trust, which may include a “manager” a knowledgeable and trust worthy real estate manager type person, a Property Management co that takes over when the primary owners / managers die or become incapaciated. The Manager takes over managing the properties on behalf of the heirs, often a great advantage since so many heirs have little interest in managing rentals (etc) and would just want either the monthly income OR for the properties to be sold, aided by the Living Trust’s specified manager. An estate planning attorney can help with the living trust. Expect to pay $2k-maybe more for just the living trust. I do my own land trusts down at the individual property level,,,, once you have that knowledge. Else expect to pay $500 +/- per property to be put into a trust…

      • What us costing you $500 per property to put them in a land trust. We do our own land trust agreements and it cost us $60 in Virginia for attorney to do quitclaim deed and almost nothing to record at courthouse.

  10. Curt Smith

    Hi Scott, trust law varies a bit state to state.. as does LLC law (IE the series LLC is in only a few states). Here in GA we don’t have series LLCs..

    I’ve moved all my properties into Land Trusts (otherwise called revocable trusts) and made the beneficial interest be my multi member LLC. The land trusts are NOT listed as members in my LLC. I don’t understand why you suggested this be the case? Is this per some other states LLC regs? In my understanding of GA regs simply pointing the land trusts to the LLC is sufficient for “control” and liability to flow from the trust (house) to the LLC.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here