For many families, commercial real estate represents one of the most significant and complex assets on the balance sheet. Yet when those assets sit within a trust, they’re often treated differently from other investments — either liquidated quickly or held without fully understanding the implications. Both approaches, however, can leave meaningful value on the table.
A more effective approach starts with a different question: What outcome does this asset need to achieve for the trust and its beneficiaries, and how do we get there?
With the right fiduciary lens and access to specialized real estate expertise, trusts can move beyond default decisions and pursue outcomes that are more thoughtful, more strategic, and ultimately more aligned with the trust’s goals.
The scenarios trusts encounter—and what better outcomes can look like
Commercial real estate owned in a trust should never be handled in a simple, one-size-fits-all way. Instead, it should be situational, with each scenario requiring analysis and thoughtful planning to increase the likelihood of an optimal outcome.
When one asset dominates the estate
In some cases, a single real estate holding can make up the majority of a trust’s value. These assets can be illiquid, complex, and not easily benchmarked against traditional investments. Rather than moving immediately to a sale, a more effective approach is to first understand what the asset truly represents: its performance, risks, market position, and potential paths forward. With that foundation, trustees can confidently decide whether to sell, hold, or pursue an alternative strategy.
As an example, Plante Moran Trust (PMT) was trustee of a trust for an individual who was a partner in a portfolio of properties that accounted for the majority of the trust’s value. PMT, serving in a fiduciary role, brought in Plante Moran Realpoint Investment Advisors (PMRIA) to assist in determining the current value of the asset and what options were available to maximize its value for the trust. PMRIA aggregated and analyzed property-level performance and assessed market position and valuation. When the individual passed away, the partner wished to buy out the trust’s interest. PMRIA then supported PMT in buyout negotiations that ultimately resulted in a significantly stronger outcome for the trust and beneficiaries than initially expected.
In situations like this, having a real estate advisor help the trust make an informed decision — one based on a full understanding of ownership rights, the asset’s value, and how to negotiate — yielded better results for the beneficiaries than going it alone.
When heirs inherit assets they don’t fully understand
Like with the above example, it’s very common for commercial real estate to be held in trust or be an asset of an estate, but the beneficiaries of the trust or estate weren’t involved in managing or operating the asset and don’t know what it’s worth, how it performs, or what their options are.
In situations like this, having real estate advisors engaged to assist trustees in gaining a clear understanding of the asset is key. That clarity allows trustees to move from uncertainty to informed decision-making, whether they ultimately choose to hold, restructure, or sell.
For example, a beneficiary inherited several properties tied to a family portfolio in trust but had limited visibility into their value or structure. Complicating matters, a related party offered to buy out their interest at a price well below market. The beneficiary engaged PMRIA to review the properties’ value and work with their legal counsel to help take distribution of those assets from the trust so that they could gain control and explore a path toward an arm’s-length sale closer to fair market value. Having a real estate advisor involved gave this client the context needed to understand that the initial offer didn’t reflect full value.
When the real estate warrants a deeper assessment
A closer look at the asset’s structure can reveal opportunities to improve outcomes before taking action.
Lease terms are one of the most common drivers. In one instance, a trust-owned commercial property faced a lease renewal where the tenant required a significant upfront tenant improvement allowance to extend the term. When PMT had PMRIA evaluate the request, our team found that it didn’t justify the required investment given the property’s remaining life, prompting a reassessment of whether renewal or sale was the better path.
In another situation, a property in the trust had only a few years remaining on a large existing lease. Rather than pursuing an immediate sale, PMRIA helped the client understand that extending the lease term created an opportunity to improve value and attract stronger buyers.
In both cases, the decision may ultimately lead to a sale, but the preparation and strategic decisions made ahead of that sale materially impacted the outcome. Alternatives such as repositioning the asset, or even exploring strategies like a 1031 exchange into a more passive structure such as a Delaware Statutory Trust (DST), may also be options depending on the trust’s objectives.
When selling immediately seems like the obvious answer — but isn’t
Sometimes, the decision to sell real estate held in a trust is straightforward. But even then, when to sell can be just as important as whether to sell. This is because commercial real estate decisions are often driven by timing — whether tied to estate settlement, liquidity needs, or perceived market conditions.
For example, a trust held several parcels of land that our client ultimately wanted to divest. The question wasn’t whether to sell; it was how to balance the timing of that sale against other considerations, including tax implications and the impact on the trust and beneficiaries. For real estate with a low tax basis, holding the asset until death can result in a step-up in cost basis, which may greatly reduce the beneficiaries’ capital gains tax upon sale. On the other hand, delaying a decision and holding onto vacant parcels until after the client’s death can significantly extend the estate settlement process, creating further delays, more fees, and frustration for beneficiaries. By having PMT and PMRIA evaluate both the financial and practical implications of the available options, the client was able to make a more informed decision about when to move forward.
When real estate becomes a source of complexity for families
Among all asset classes, commercial real estate is often one of the most misunderstood on a client’s balance sheet. It’s easy to assume it will “take care of itself,” but when left unaddressed or unmanaged, it can create unintended consequences.
This is especially true in situations involving multiple beneficiaries, differing expectations, or limited transparency. In some cases, questions arise around how assets are being managed, how value is determined, or whether decisions are aligned with the trust’s intent. This was the case with one client, a beneficiary of a family-owned real estate portfolio, who engaged PMT, PMRIA, and the Plante Moran forensic accounting team to provide them with peace of mind regarding the appropriateness of the business terms for their allocations.
Here, the roles of an independent trustee and a real estate advisor were critical. By bringing objectivity, analysis, and fiduciary discipline into the process, they helped reduce the potential for conflict and preserve alignment across stakeholders.
Impact of a more intentional approach to real estate in trusts
Across these scenarios, a common theme emerges: outcomes improve when real estate investments are evaluated deliberately and proactively, not reactively. A more intentional approach can lead to:
- Stronger value outcomes. Decisions are informed by a clear understanding of the asset’s performance, structure, and market position.
- Greater clarity for decision-makers. Trustees and beneficiaries gain insight into what they own and the options available to them.
- More alignment with fiduciary responsibility. Actions reflect what’s best for the trust and its beneficiaries, not just what simplifies administration.
- Reduced downstream complexity. Addressing real estate thoughtfully can help avoid delays in estate settlement and unintended consequences for beneficiaries.
- Increased confidence in the outcome. Whether holding, selling, or restructuring, decisions are grounded in analysis rather than assumption.
At its core, the difference isn’t just in the outcome; it’s in the process behind it.
Moving from default decisions to better outcomes
As more wealth transitions to the next generation, many families will inherit commercial real estate they didn’t originate, operate, or plan for. This shift introduces new considerations for succession planning. Beneficiaries may not have the same experience or interest in managing these assets, and expectations around ownership, liquidity, and long-term use can vary widely. At the same time, the absence of early conversations can make these transitions more difficult, particularly when real estate represents a meaningful portion of the estate.
Real estate within a trust doesn’t have to be treated as a complication to manage or a risk to eliminate. With the right approach, it can become a source of opportunity — one that supports the long-term goals of both the trust and its beneficiaries.
Many independent trustees are reluctant to take on trusts that include real estate holdings. PMT’s willingness to serve in these situations — combined with PMRIA’s specialized real estate advisory capabilities — helps set our team apart. We work together to evaluate every asset through a holistic fiduciary and real estate lens, considering value, risk, and long-term objectives. Rather than defaulting to a “sell it all now” approach, we help clients explore their options and make more informed decisions. If you’d like to learn how this approach may apply to your situation, contact our team to learn more.
Opinions expressed in this article are current as of the date of this article, and are subject to change at any time.
Plante Moran Realpoint Investment Advisors and Plante Moran Trust publish this content to convey general information about our services. Investments and strategies mentioned herein may not be appropriate for you. Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain. You should consult a representative from Plante Moran Realpoint Investment Advisors or Plante Moran Trust for advice regarding your own situation.
