I’ve been reading alot of Ron LeGrande’s material lately and he reccomends strongly to put all your properties in a land trust. He also says to file the land trust “in your filing cabinet at home” as opposed to officially at the courthouse or wherever.
Can someone more familiar expound upon this?
First, what are the benefits of the land trust?
Second, why does he say to only file it “at home”?
Land trusts are good for privacy and estate planning. Keep in mind, each state is different. The common Illinois-style land trust, is really only valid in Illinois.
Always record the deed. Never let it sit in a drawer at home. You will have to explain why you didn’t record immediately if there is a problem later and there really isn’t a valid reason to explain why a deed sat unfilled for many years.
Do some research on business trusts. You will find they have the same benefits of a land trust along with some asset protection benefits not found in a traditional land trust.
It depends upon the state laws where you have your trust. I created a trust for a property in Colorado. The trust was to protect the owners of the property from the actions of other partners. That is the good use of a land trust, in states where there are not requirements of disclosure.
I am investing in properties in Arizona. Land trusts are useless there, since state laws require the recording of the beneficiaries of a trust. So a lawyer looking for assets can easily find the beneficiaries and attempt to lien the assets of the trust.
In California, where I live, there are no specific laws concerning land trusts, so they all fall under probate law, I have been told. So here land trust have value, again, because they can prevent a title search from disclosing the owners of the beneficial interests of the trust.
Land trusts are not recorded, since they are essentially private contracts between the beneficiaries and the trustee. The deeding of the property into the trust should be recorded, along with a certificate of trust, showing the trustee’s name and certifying that the trust exists.
Disclaimer: I am not a lawyer and am therefore not dispensing legal advice, only reporting my experiences.
The “Warranty Deed to Trustee” (Deed) is recorded, the “Trust Agreement” is not and is what you can file away.
We have been using Land Trusts for many years and the advantages are many and varied. They allow you to control a deal that has not closed through the trustee, they avoid many of the chain of title issues and indeed you should immediately file the Warranty Deed to Trustee but you never record the Trust itself. You must be sure that the trust is written correctly for your state and also be sure that the trust language is in your deed. I highly recommend that you consult with a knowledgeable attorney to set up your first one.
Land trusts are a great way to hold your real estate in certain states and situations. Just holding title in a co. can be an effective way to shelter assets as well. Trusts are useful in estate planning as well as asset protection. Ron Legrand says to use them for those reasons as well as avoiding the due on sale clause when doing a deal sub 2. What he says, if I remember correctly, is to file the assignment of beneficial interest in your filing cabinet. I think he is making the point that the lender who holds the note on the property which is being taken over sub 2 will not be able to see the assignment of beneficial interest, thus he will not be able to call the loan due.