IRA Titling: Understanding the Essentials

Understanding custodial IRA titling is critical for deal sponsors, wealth managers, and individual IRA owners investing in alternative assets like real estate, private equity, and private placements.

If you’ve ever looked at a deed, operating agreement, or subscription document for a self-directed IRA investment and wondered why the titling looks the way it does, you’re not alone. IRA asset titling is one of the most misunderstood aspects of self-directed retirement investing, and getting it wrong can create real problems: delayed closings, confused title companies, unnecessary litigation exposure, and even tax complications.

To maintain qualified status, retirement assets must be held by a qualified custodian. Investment documents are titled in the name of the IRA, not the investor personally, and utilize the custodian’s EIN rather than the investor’s Social Security number. This is what makes titling so important: it’s the mechanism that connects the investment to the tax-advantaged account and signals to all parties how the asset is held.

At American Estate & Trust (AET), we’ve built our custodial platform around getting titling right, and we offer custom titling solutions tailored to the needs of deal sponsors, RIAs, family offices, and individual IRA owners.

What Is IRA Titling?

When your self-directed IRA invests in an alternative asset, whether that’s a rental property, an LLC membership interest, a promissory note, or a private placement, the asset needs to be titled in a way that reflects the IRA’s involvement. This is how the IRS knows the investment is being “held by” a qualified custodian inside a tax-advantaged account.

For custodial IRAs (which is what AET administers), the titling serves a specific purpose: it shows that the asset is subject to an IRA custodianship arrangement while making clear that the IRA owner, not the custodian, is the legal owner of the investment under state law.

Custodian vs. Trustee: Why the Distinction Matters for Titling

There’s a critical legal difference between an IRA trustee and an IRA custodian, and it directly affects how assets should be titled and who has legal responsibility.

A trusteed IRA is a true trust under state law. The trustee holds legal title to the IRA assets and manages them for the beneficiary. The classic “FBO” (For the Benefit Of) format originates from this trust relationship.

A custodial IRA, on the other hand, is not a trust under state law. The custodian holds the assets for safekeeping and performs ministerial duties, but legal and equitable ownership remains with the IRA owner. The custodian has no ownership interest, no fiduciary obligation to manage investments, and no authority over the assets beyond what the owner directs.

This distinction matters enormously when it comes to:

• Real estate transactions: title companies and attorneys need to know who the actual legal owner is.
• Private placements and fund subscriptions: issuers need to understand who the contracting party is.
• Litigation and legal matters: the IRA owner, not the custodian, is the real party in interest.

The Problem with Traditional IRA Titling

For decades, the self-directed IRA industry defaulted to a trust-style titling format for custodial accounts: “ABC Custodian FBO John Smith IRA.”

While this format satisfies the IRS requirement that assets be “held by” a custodian, it creates confusion for attorneys, title companies, county recorders, and counterparties who interpret “FBO” as indicating a trust relationship. This leads them to believe the custodian is the legal owner or a fiduciary responsible for the asset.

The result? Title companies demand custodian signatures on warranty deeds the custodian has no authority to guarantee. Property tax bills and code violations get sent to the custodian instead of the owner. Closings stall because third parties don’t understand who has authority to act.

How AET Handles Titling Differently

AET has modernized its titling approach to clearly reflect the legal reality of custodial IRA ownership. Our current naming format is designed to:

• Identify the IRA owner as the legal owner of the investment.
• Indicate that the asset is held in a non-trust custodial IRA, not a trust.
• Show AET’s role as custodian, holding the asset for tax-administration purposes only.
• Minimize confusion for title companies, attorneys, fund administrators, and counterparties.

This clarity helps transactions close faster, reduces unnecessary legal disputes, and ensures that all parties understand their actual rights and obligations.

What AET Titling Looks Like in Practice

If you’re reviewing a cap table, subscription agreement, deed, or operating agreement and you see an IRA investor’s name, the titling format tells you a lot about how that custodial relationship is structured. Here’s how AET’s approach compares to the traditional industry standard.

Traditional FBO Format (used by most custodians):

American Estate & Trust FBO John Doe IRA

This format puts the custodian’s name first and uses “FBO” (For the Benefit Of), which mirrors trust language. While common, it frequently causes third parties to assume the custodian is the legal owner or a fiduciary with authority over the asset. That confusion can create problems for investors, including closing delays, misdirected property tax notices, and third parties who won’t transact without unnecessary custodian involvement.

AET’s Current Format:

John Doe, Legal Owner Via Non-Trust Custodial IRA with AET

This format leads with the IRA owner’s name and explicitly states their status as the legal owner. It clarifies that the account is a non-trust custodial IRA, not a trust, and identifies AET’s role as the custodian rather than a trustee or fiduciary. There is no ambiguity about who owns the asset, who has authority to act, or who is responsible for obligations tied to the investment.

If you’ve come across either of these formats on a document and have questions about what they mean for your transaction, we’re happy to help clarify.

Custom Titling for Deal Sponsors, Funds, and RIAs

Not every investment fits this titling format. That’s why AET offers custom titling solutions for:

• Deal sponsors and fund managers who need IRA investor capital titled consistently across subscription documents, cap tables, and operating agreements.
• RIAs and wealth managers who manage client portfolios across multiple alternative asset classes and need titling that aligns with their compliance and reporting workflows.
• Individual IRA owners making direct investments in real estate, promissory notes, precious metals, cryptocurrency, or private company interests.

Whether you need titling that works with a specific state’s recording requirements, aligns with a fund’s legal structure, or simply avoids the confusion that traditional “FBO” formatting creates, our team can work with you to design the right approach.

Key Takeaways

For IRA owners: You are the legal owner of your custodial IRA investments. AET holds them for tax-administration purposes only. Proper titling protects your interests and keeps transactions clean.

For deal sponsors and fund managers: Working with a custodian that gets titling right means fewer closing delays, cleaner cap tables, and less confusion when investors use IRA capital.

For attorneys and title companies: If you see AET listed on a title, we are a non-fiduciary, passive custodian, not a trustee, not a legal owner, and not a party to the transaction. The IRA owner is your real party in interest.

Need Help with IRA Titling?

If you’re a deal sponsor, wealth manager, attorney, or IRA owner who needs clarity on how self-directed IRA assets should be titled, or if you need a custodian that offers flexible, custom titling for your specific investment structure, contact American Estate & Trust to learn more.