Here’s a comprehensive, Philippine-specific guide to setting up a trust that holds real property—what it is, when it makes sense, the exact paperwork, taxes and fees to expect, and the traps to avoid.

How to Set Up a Trust for Real Property in the Philippines

Legal requirements and costs (Philippine context)

Quick take: In the Philippines, a trust is a legal relationship—not a separate “entity”—where a trustee holds legal title to property for the benefit of one or more beneficiaries, under terms set by a trustor (also called a settlor or grantor). For land and other immovables, express trusts must be in writing, and transfers into the trust generally trigger the same taxes and local registration fees as any other conveyance of real property.

1) Trusts under Philippine law (the essentials)

What law applies. Philippine trusts are recognized and governed by the Civil Code (notably the articles on trusts, including the rule that express trusts over immovable property must be in writing), by jurisprudence, and by specific tax rules under the National Internal Revenue Code (NIRC) for the taxation of estates and trusts.
Kinds of trusts you’ll actually use for real property.
- Inter vivos (living) trust: created during the trustor’s lifetime; commonly revocable or irrevocable.
- Testamentary trust: created by will and becomes effective on death.
- Private (family/estate planning) vs charitable (public benefit).
Express vs implied. You will be setting up an express trust. The Civil Code allows implied (resulting/constructive) trusts, but those arise from conduct or equity—useful in litigation, not for planning.
Capacity & title. The trustee holds legal title on the land title (TCT/OCT) in trust for the beneficiaries. The beneficiaries hold the equitable/beneficial interest as defined in the trust deed.

💡 Written form is mandatory. An express trust over land cannot be proven by oral testimony; you need a written, notarized instrument describing the property and the terms. (This writing rule is distinct from the Statute of Frauds; practitioners rely on the Civil Code’s “no parol proof” rule for express trusts over immovables.)

2) When a real-property trust makes sense

Estate planning: centralized management of family land; smooth transfer on incapacity/death; minimizes probate delays for property already in the trust.
Asset segregation/continuity: separates management from ownership (helpful for minors, elderly family members, or special-needs planning).
Governance: you can impose conditions (age-based distributions, investment rules, sale restrictions consistent with law), appoint successor trustees, and define dispute-resolution mechanisms.
Confidentiality (relative): the trust deed is private; however, once you register/annotate at the Registry of Deeds and pay taxes, aspects become part of public records.

3) What you cannot do (red lines)

Foreign ownership of land. The Constitution bars foreigners (and foreign-owned corporations >40%) from owning land. A trust cannot be used to sidestep this—e.g., a Filipino “trustee” holding land for a foreign beneficiary is a void/illegal arrangement. (Condo units are different: up to 40% foreign ownership in the condominium corporation is allowed, but the 40% cap still applies.)
Sham/nominee arrangements. If the “trust” is just a name on paper but the real intent is to conceal the true (ineligible) owner or defeat creditors, expect it to be disregarded.
Unreasonable restraints. Philippine law is wary of perpetual or excessive restraints on alienation. “Spendthrift”-style clauses should be carefully drafted and balanced against creditor-protection and public-policy limits.
Violating legitimes. You cannot use lifetime transfers to a trust to defeat compulsory heirs’ legitimes. On death, inofficious donations may be reduced to restore legitimes, and lifetime gifts to the trust may be collated.

4) Choosing your structure

Revocable vs irrevocable
- Revocable: Trustor can amend or revoke. Flexible, but assets may be included in the trustor’s taxable estate on death and may be exposed to the trustor’s creditors.
- Irrevocable: Harder to change; often treated as a completed transfer (implications for donor’s tax), and can provide stronger segregation from the trustor’s assets (subject to fraud/creditor rules).
Self-declared vs transfer to a trustee
- Declaration of Trust (self-declared): The owner declares they hold the titled property as trustee for named beneficiaries.
- Conveyance to a trustee: The trustor transfers title to a trustee (individual or institutional) “as trustee of the ___ Trust.”
Who can be trustee?
- Individuals: Typically Filipino citizens for land.
- Institutions: Philippine banks/trust entities may act via trust departments (regulated). Ensure the trustee is qualified to hold land.
Trust protector (optional): A third party with limited oversight powers (e.g., remove/replace trustee for cause). Helpful for long-running family trusts.

5) The step-by-step process (inter vivos trust, land already titled)

A) Plan the terms

Identify parties (trustor, trustee, beneficiaries), property (TCT/OCT nos., technical description), purpose, duration, distribution triggers, trustee powers (lease, mortgage, sell; invest; open bank accounts), accounting & reporting, successor trustees, protector (if any).
Marital property check: If the land is community/conjugal, get the spouse’s written consent. Donations between spouses are generally void; but donations to common children are allowed—structure accordingly.
Do not violate foreign-ownership restrictions (see §3).
Consider how rental income and expenses will be handled and taxed.

B) Draft the instrument (must be in writing)

Use one of:
1. Declaration of Trust (self-declared), or
2. Deed of Donation/Assignment to Trustee (gratuitous), or
3. Deed of Sale to Trustee (for value), together with a Trust Deed spelling out terms.
Include “capacity” language on titles and deeds, e.g., “Juan Dela Cruz, as Trustee of the ABC Family Trust dated ____, not in his individual capacity.”

C) Execute & notarize

Sign before a notary public in the Philippines (or apostille/consularize if signed abroad).
Prepare: valid IDs, marital status & spousal consent (if applicable), tax IDs, property title & tax declarations.

D) BIR taxes & clearances (ONETT route)

For any change of registered ownership, secure an eCAR (Electronic Certificate Authorizing Registration) from the BIR after paying applicable national taxes (see §7).
Obtain/confirm a TIN for the trust (trusts/estates file income tax returns through the trustee under a TIN).
Get Real Property Tax (RPT) clearance from the LGU.

E) Register with the Registry of Deeds (RD)

Submit the deed(s), trust deed (for annotation), eCAR, DST proof, RPT clearance, transfer tax receipt, IDs, owner’s duplicate title.
The RD issues a new TCT in the trustee’s name “as trustee for ___ Trust”, and annotates the trust terms/conditions as necessary.

F) Post-registration housekeeping

Accounting: Keep trust books, annual statements to beneficiaries if required by the deed.
Tax filings: File annual income tax returns for the trust (through the trustee), withhold taxes on rentals if applicable, and pay RPT annually.
Compliance: Update beneficiaries/trustee changes by annotating at the RD and informing the BIR when relevant.

6) Taxes, fees, and typical costs

Rates below are the common Philippine frameworks used in practice. Actual amounts depend on your facts (zonal values, LGU rates, property classification). Always compute using the higher of the consideration or the fair market value (often the BIR zonal value or LGU assessed value, whichever is applicable).

A) National taxes at funding (putting the land into the trust)

If you use a DONATION/ASSIGNMENT to trustee

Donor’s Tax: 6% on net gifts exceeding ₱250,000 in a calendar year (TRAIN Law). For land placed into an irrevocable trust as a gift, donor’s tax generally applies.
Documentary Stamp Tax (DST): Deeds conveying real property (including donations/assignments) are typically subject to DST, commonly computed at ₱15 per ₱1,000 (≈ 1.5%) of the higher of consideration or FMV.
Capital Gains Tax (CGT): Not applicable to a pure donation (no sale).

If you use a SALE to the trustee

Capital Gains Tax (CGT): For individuals selling capital assets (real property): 6% of the higher of gross selling price or FMV. (If the land is an ordinary asset for the seller, income tax/VAT rules differ.)
DST: As above, ≈ 1.5%.
Creditable Withholding Tax (CWT): May apply depending on the seller’s status and asset classification.
VAT: Only if the seller is VAT-registered and the property is an ordinary asset in trade/business.

If you use a SELF-DECLARATION OF TRUST (no change of registered owner)

No transfer of legal title occurs at funding, so CGT/donor’s tax may not be triggered at that moment.
However, practitioners typically annotate the Declaration of Trust on the title to protect beneficiaries. Future transfers (e.g., to beneficiaries) will still require BIR processing and may trigger taxes when ownership changes.

B) Local taxes & fees (both sale and donation routes)

Local Transfer Tax: Usually up to 0.5% of FMV in provinces and up to 0.75% in cities/Metro Manila (check your LGU).
Registry of Deeds Registration Fees: Based on a sliding schedule (often roughly a fraction of 1% plus fixed charges).
Notarial Fees: Market-based; simple deeds may be a few thousand pesos; larger transactions typically higher.
Miscellaneous: Certified copies, annotation fees, courier, due-diligence (e.g., certified title, tax dec).

C) Ongoing taxation while the trust holds the land

Income Tax on trust income: Rental income and other income of the trust are generally taxed similarly to individuals, reported and paid by the trustee under the trust’s TIN (grantor-trust rules can shift taxation to the trustor in some revocable/controlled arrangements).
Withholding taxes: If the lessee is a withholding agent (e.g., a corporation), creditable withholding on rent often applies.
RPT (Real Property Tax): Annually to the LGU (base rate typically 1% of assessed value in provinces and 2% in cities/Metro Manila), plus the SEF add-on.
VAT/Percentage tax: Only if the trust is engaged in business and statutory thresholds are met.

D) When the trust distributes the land to beneficiaries

If the transfer is pursuant to the original trust terms (e.g., on a date or upon a condition), this is usually not a sale; CGT typically does not apply.
Donor’s tax generally does not re-apply if the earlier donation into an irrevocable trust was already taxed; however, DST and local transfer tax/registration fees are commonly payable on the conveyance from trustee to beneficiary, and you must secure an eCAR for the transfer.
If the trust is revocable or the distribution differs materially from the funding terms, tax treatment can change—coordinate with the BIR to avoid surprises.

E) Ballpark illustrations (for planning only)

Assume FMV: ₱10,000,000 (figures rounded; your actual base is the higher of zonal/assessed values or price):

Donation to an irrevocable trust

Donor’s tax: (₱10,000,000 – ₱250,000) × 6% ≈ ₱585,000
DST (≈1.5%): ₱150,000
Local transfer tax (0.75% city): ₱75,000
RD fees & misc (illustrative): ~₱20,000–₱40,000
Notary/legal/due diligence: variable (plan meaningful budget) Indicative total gov’t take (ex-professional fees): ~₱810k+

Sale to the trustee

CGT (6%): ₱600,000
DST (≈1.5%): ₱150,000
Local transfer tax (0.75%): ₱75,000
RD fees & misc: ~₱20,000–₱40,000
Notary/legal/due diligence: variable Indicative total gov’t take (ex-professional fees): ~₱845k+

These are planning heuristics. Exact computations depend on classification (capital vs ordinary asset), zonal value, exemptions, and current BIR/LGU schedules.

7) Practical drafting checklist (what to put in your trust deed)

Identity clauses: Full civil status of trustor/trustee; trustee expressly acts “as trustee.”
Property schedule: Full legal description (TCT/OCT nos., lot/block, area, technical description), improvements, appliances/fixtures if relevant.
Purpose & duration: Clear purposes (management, education, maintenance, succession), and term (e.g., until youngest child reaches 25, or fixed years).
Dispositive scheme: Who benefits, when, and how; discretionary vs mandatory distributions; how income vs principal are treated.
Trustee powers & limits: Acquire/lease/mortgage/sell; invest; engage agents; open bank accounts; borrow; settle claims; partition property; execute deeds; register/annotate; with standards of care (prudence) and indemnity for good-faith acts.
Protections:
- Successor/alternate trustees; resignation/removal for cause; vacancy filling.
- Protector powers (limited; e.g., remove/replace trustee, consent for major sales).
- Spendthrift language calibrated to Philippine policy (avoid absolute, perpetual restraints).
Reporting & audit: Annual accounts to beneficiaries; right to information; dispute resolution (Philippine law/venue; optional arbitration clause).
Tax & expenses: Who bears taxes, insurance, maintenance, association dues; reimbursement mechanics.
Foreign-ownership compliance: Representation/warranty that beneficiaries/trustee are qualified where land is involved.
Severability & amendment: Rules for amending (if revocable), or strict prohibition (if irrevocable).

8) Special scenarios & pitfalls

Conjugal/community property: You cannot unilaterally move community/conjugal land into a trust without spousal consent; donations between spouses are restricted.
Minors/guardianship: A trust can avoid court guardianship of a minor’s property; include clear rules on the minor’s maintenance/education distributions.
Condominiums: Check the 40% foreign ownership cap at the project level before funding a trust that benefits foreigners; the trust cannot lawfully “create” more foreign headroom.
Agricultural/residential classification: Zoning or agrarian laws can restrict use, subdivision, or sale—confirm before you lock in trust terms that assume flexibility.
Loans & mortgages: Lenders may require beneficiary/trust consent or won’t lend to an individual trustee; institutional trustees ease financing but charge fees.
Unregistered/untitled land: Rectify title first (judicial/administrative titling) before trust funding.
Failure to annotate: Un-annotated trusts expose beneficiaries to bona fide purchaser risks; always annotate and keep certified copies.

9) Using a will instead (testamentary trust)

If you prefer not to move title now (and avoid upfront donor’s/CGT), you can create a testamentary trust in your will. The property transfers to the trustee after probate, with estate tax (6%) assessed on the net estate. This can be simpler today but slower on death due to probate.

10) Professional fees & timelines (what to expect)

Lawyer’s fees: Depend on complexity, number of properties, tax structuring, and coordination with BIR/LGU/RD. Expect higher fees for irrevocable/multi-asset trusts, institutional trustees, or cross-border signings.
Institutional trustee fees: Setup plus annual/admin fees and transaction fees (e.g., sales, mortgages, distributions).
Notary, due diligence, courier, certified copies: Budget sensibly; bigger transactions cost more.
Processing: Government processing spans multiple offices (BIR ONETT/eCAR, City Treasurer, Assessor, RD). Build in time for each stage and for resolving valuation questions.

11) Frequently asked questions

Q: Can a foreign spouse be a beneficiary of a trust that holds land? A: A foreigner may benefit economically (e.g., receive income) from a valid trust, but the arrangement cannot result in foreign ownership of land, directly or through the trust. Be very careful; seek specific advice.

Q: Do I need to register the trust with the SEC? A: No—private family trusts are not registered with the SEC. Corporate trustees (banks/trust corporations) are regulated; the trust deed and annotations are handled via the Registry of Deeds and BIR.

Q: If I keep the trust revocable, do I still pay donor’s tax now? A: Funding a revocable trust via donation is often not treated as a completed gift for donor’s-tax purposes, but tax outcomes turn on retained powers and drafting. Many families either: (i) keep it revocable and avoid a taxable gift now (but accept estate-inclusion risk), or (ii) make it irrevocable and address donor’s tax upfront.

Q: What goes on the land title? A: The trustee’s name “as trustee of the [name/date] Trust,” with the trust deed (or a memorandum of trust) annotated. This gives notice to third parties and protects beneficiaries.

12) Clean, compliant setup: a condensed checklist

Title & tax due diligence (TCT/OCT, liens, RPT status, zonal values, classification).
Choose structure (revocable vs irrevocable; self-declared vs transfer to trustee; private vs charitable).
Draft trust deed + deed of transfer (with spousal consents).
Notarize (apostille if executed abroad).
BIR ONETT: compute and pay CGT or donor’s tax, DST, secure eCAR; get/confirm TIN for the trust.
LGU: pay local transfer tax and secure RPT clearance.
Registry of Deeds: lodge documents, annotate trust, and obtain new/annotated title.
Aftercare: set up accounting, file trust income tax returns, pay RPT annually, manage the property per trust terms.

Final word (important)

This guide is general information based on standard Philippine practice. Small drafting choices (revocable powers, who the beneficiaries are, property classification, marital regime, corporate vs individual trustee) change the tax and legal results. Before you sign or pay any tax, have a Philippine lawyer and a tax professional review your facts and documents.