From the privacy point of view, the Trust is superior to other entities like corporations, LLC’s, LLP’s, LP’s, and PA’s. The Trustee controls the Trust records and the beneficiary’s identity, and can not expose this information without a subpoena.
No one has knowledge of your Beneficial ownership except your attorney, the Trustee, and you. And your attorney and the Trustee are not permitted to reveal anything about you, nor any Beneficiary, nor the terms of the Trust, without a court ordered subpoena.
A Land Trust is a revocable, living Trust that we use explicitly for holding title to real property. Each property should be titled in a separate Trust, affording maximum privacy but minimal protection. To increase your protection, the Beneficial interest should be assigned to another Trust, (weak), or an LLC, LLP, LP, PA, or corporation, (stronger).
These are easy to set up because you have no filing requirements with the state. It’s really just a contract with very specific terms. These terms will state what happens in different circumstances and the responsibility of all parties. All you’ll need to provide is the asset, the beneficiary, and a Trustee.
The assets will be held in the Trustee’s name. You can convey property you already own in your name into a Trust, but it is better to have the seller convey it directly to the Trustee. This leaves the smallest trace of your ownership.
The classic duties that a Trustee can perform, only with the written authorization and direction of the beneficiary, include holding title to real estate, execution and delivery of promissory notes, deeds of Trust, leases, assignments of rents, and grant deeds.
Generally, a Trust must satisfy three criteria:
1.Intention. The intention to create a Trust must be clear;
2. Subject Matter. The property in the Trust must be unmistakably identified. You may not offer - "the majority of my estate" - as the exact content cannot be established. Trust property may be any form of specific property, real, personal, tangible, or intangible. Most often it is real estate, stocks, or cash.
3.Objects The beneficiaries of the Trust must be clearly identified. Beneficiaries may include people not born at the date of the Trust, like, "my future grandchildren"). On the other hand, the object of a Trust could be a charitable purpose rather than specific beneficiaries.
These might be the top seven reasons to use Land Trusts:
1. Privacy.
In this digital age, everyone with a computer and an internet connection can look up the full ownership of any property. Your privacy is tremendously exposed and easily compromised. This is a way for most people, who don’t want others knowing exactly what they own, to establish a coat of protective armor.
Anonymity is extremely desirable, and can save you money, in positions where the seller is hesitant to accept your offer. If you’re looking to assemble property, you will not want existing owners to know who is doing the buying.
2. Protection from Liens.
In some respects, property titled in a Trust is not subject to liens against the beneficiary of the Trust, since the title is not in their name. For example, if you are dealing with a seller in foreclosure, a judgment holder or the IRS can file a claim against the property in the name of the seller. If the property is titled in a Trust, the personal judgments or liens of the seller, if the beneficiary, will not attach to the property. This effectively separates the owner or seller from the property.
If the Trustee resides in a different state than the property is located, it will be difficult and expensive for creditors to discover your interest in the property.
Still, because you retain control of the assets in a Revocable Trust, your Beneficial interest in it is subject to creditor claims. If a judgment is entered against you, the creditor can force you to list all your assets, and if he’s savvy, any Beneficial interests you hold in Trust. Then the creditor can compel you to sign over your Beneficial interest to them. Of course, in a properly prepared Domestic Irrevocable Trust or Foreign Asset Protection Trust, creditors will not have this power.
3. Protection from Title Claims.
If you sign a warranty deed in your own name, you are subject to potential title claims against you, if there is a problem with title to the property. For example, a lien filed without your knowledge could result in liability against you, even if you purchased title insurance. A Land Trust in your place as seller will protect you personally against many types of title claims because the claim will be limited to the Trust. If the Trust already sold the property, it has no assets and thus limits your exposure to title claims.
4. Discouraging Litigation.
People tend to only sue people who look like they have money. Attorneys working on contingency will take cases which they can not only win, but collect, since their fee is based on collection. If your investments are hard to find, you will appear "insolvent" and less worthy of a lawsuit. Even if a potential plaintiff thinks you have money, difficult to find assets will discourage litigation against you.
5. Protection from HOA Claims.
The homeowner is personally responsible for HOA fees and assessment’s when the title to a property in a Home Owner’s Association unit is in their name. In an HOA, take title in a Land Trust so that the Trust itself becomes the sole recourse for all Home Owner Association’s debts.
6. Making Contracts Assignable.
The "Beneficial Interest" of a Land Trust is assignable, just like stock in a corporation is assignable. After property is titled in Trust, the Beneficiary can be changed without changing title to the property; or without recording it in a public record.
This is to your advantage when a real estate contract is non-assignable, like REO or HUD property. In place of making the offer in your name, make it in the name of a Land Trust; then assign your Beneficial Interest to a third party.
7. Making Loans Assumable.
A non-assumable loan can effectively become assumed by using a Land Trust. The seller transfers title into a Land Trust with himself as the Beneficiary. This transfer does not trigger the “due-on-sale” clause of the mortgage note. After, he transfers this Beneficial Interest to the buyer.
The second transaction would normally trigger the “due-on-sale” clause, but such transfer does not come to the attention of the lender because it is not recorded anywhere in public records. This makes your non-assumable loan "assumable".
Yes, there are countless inventive and valuable uses for the Land Trust, limited only by your imagination! What is your experience with Land Trusts?
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