Trust Fund Kids Take Over Manhattan — 28% of 2024 Sales Involved Wealthy Parents Gifting Trophy Homes

Why invest when you can inherit? Affluent parents are giving their kids a leg up on Manhattan’s notoriously pricey real estate ladder by passing on their assets in record numbers. 

Last year, 28% of Manhattan home sales were via trusts, which gifted property to their children — a considerable jump from three years earlier, when 17% of residential transactions were via trusts.

“These clients want to avoid tax ramifications with their purchase and be discreet with their spending,” Frances Katzen, a Douglas Elliman luxury broker who estimates 40 of her parental sales are via trusts, told Bloomberg.

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Baby Boomer Wealth Transfer

Bloomberg says that the baby boomer wealth transfer, extortionate home prices and high transfer taxes have contributed to the uptick in gifting via trusts. The Manhattan median home price sale in 2024 was $1.1 million, according to Redfin. With all-cash deals dominating over 60% of the Manhattan market, many people — even high earners — have been forced onto the sidelines, appraisers, Miller Samuel told Bloomberg. 

New York Transparency Laws

Part of the increase in trust use, according to the New York Post, could be because of new transparency laws Gov. Kathy Hochul introduced via the LLC Transparency Act in 2023, where buyers holding homes in corporate entities had to sign owner disclosures. Trusts have long been a staple in wealth management, allowing the transfer of assets without incurring tax liabilities while maintaining anonymity.

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“Coming out of the pandemic, the surge in wealth, the expansion of the wealth gap has probably facilitated this legal mechanism more than a typical year,” Miller told the Post. “The last couple of years, we’ve seen a tremendous increase in wealth and this just happens to be a vehicle that works — a legal vehicle that works for enabling parents to help their children buy real estate. But by no means is it the only use of this vehicle, which has been around a long time.”

Home Equity Has Climbed 80% Since 2020

The increase in home prices, especially in Manhattan, has seen property owners sitting on ever-increasing amounts of equity. The Wall Street Journal estimates that nationally, home equity has climbed by almost 80% from $19.5 trillion in early 2020, thanks to a rapid rise in house prices. The trend doesn’t seem to abate, with Manhattan apartment prices increasing 29% in the first quarter — according to appraiser Miller Samuel — compared to the same period in 2024, as buyers sought stability away from the volatile stock market. Trade wars have only made stock market unpredictability worse.

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High-End Sales Have Driven The Market

High-end sales have driven the market, with apartments priced at over $5 million soaring by 49% compared with a year ago, according to CNBC, citing Compass data. While owning a coveted slice of Manhattan real estate with a ton of equity is like winning the lottery for many, once the asset is passed along in a trust, there’s nothing to stop beneficiaries from selling their parents’ hard-earned homes. 

“Own The Dirt”

Aaron Shamshoian, a wealth strategies adviser at Bank of America, recommends thinking carefully about liquidating assets in well-established neighborhoods. “You want to own the dirt,” he told Realtor.com. “Look at some of the blue-chip Washington, D.C., markets like Kalorama and Georgetown and some of the tried-and-true neighborhoods. If you buy a house there in cash and you sit on it for 10 or 15 or 20 years and it becomes an investment vehicle, it’s nice to have other large placements of capital around you.”

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