I am closing on a new property on the 14th of this month and am wondering about creating a land trust. Is it too late to still do this and is it really beneficial right now to do so? I understand the implications of keeping my name off of public record and liability, anything else?
I read the article by Mike Butler “answers to all those questions you forgot to ask about land trusts” and it sounds very simple to setup. From the article it says:
STEP 1: After you capture a deal meaning you have an agreement to buy a property, contact your closing attorney or title company and tell them to make the owner of record on your deed to read:
“The (Land Trust Name) with (Trustee’s Name) as Trustee with full power of sale” of
STEP 2: Attend your closing, buy the property and return to your home or office with a copy of your deed and closing statement. Enter your closing statement properly in your Investor Books made. Next, is your land trust. If you don’t have a computer, you could use your land trust agreement just like your rental agreement.
Fill in the blanks for:
Address of the property
Name of the Land Trust
Trustee Name
Beneficial Interest (1 or more persons or entities)
Legal Description of property (easiest way is staple a copy of your deed to the land trust agreement)
Notarize Trustee and Beneficiary signatures.
Is it really this simple? Is the name of the land trust something that you arbitrarily make up, or must this be setup ahead of the agreement to the specific property?
A little confused but not completely lost.
Another thing, I don’t have an attorney yet, any other suggestions for who to make the trustee?
While almost anyone can be named the trustee of a land trust, there are definite benefits to use a Corporate Trustee as the trustee of your land trust. Appointing a trustee other than a corporation would allow the property to fall into the trustee’s probate and other legal problems: but a corporate trustee (in virtually all states) must be a trust company only (bank and trust, title and trust, XYZ trust company) … or a non-profit corporation acting only for the benefit of its certified members.
Yes I understand why you think it is better and safer to use a corporation as the trustee in a land trust. I have read many many of your posts and your endorsements for these specific types of trusts “NARS”.
However, you completely failed to answer ANY of the questions that I asked. which were much more general in nature and have absolutely NOTHING to do with the specific types of trusts.
Ok I take that back you did answer the very last piece of what I was asking as to the name of the trustee.
But I sure am not going to pay 1% of AMV plus 500 to set up a trust on a property that I have already financed and will be living in myself for a while.
There are others on this forum very familiar with land trusts whom I am sure will be helpful.
I only answered your question about who you should appoint as Trustee because I feel this is of vital importance, and if you are going to be living in the property all you will need is a simple land trust which will cost you less than $325 and I don’t sell them.
This must be completed with the title company prior to closing does it not? Can I ask you what is involved in the specific process and what is the $325 and where does that go to? Thanks I appreciate your willingness to respond.
well i guess if the only thing that makes a pactrust different from a regular land trust is the fact, as gary informed us, of using a non-profit corp as the trustee, then it is just a simple matter of forming a non-profit, yourself or through your attorney and not having to pay those high prices charged by nars.
i found the secretary of state offices for delaware, florida and nevada that have online services and info you can get more info.
BooBoo,
Sure, it could be done that way. Just become extremely familiar with 501(c)(3) in the Internal Revenue Code for the various reporting requirements. You also want to ensure the trustee/principals are 10 feet tall and bulletproof; John Wayne style. I wish I were, but my lifestyle doesn’t allow it…so I resort to other methods.
For best asset protection, I’d look hard at Wyoming (extremely business friendly) for new corp set-up. Virtually the same benefits as Nevada but much cheaper. Both states allow Nominee Directors to keep your name off the charter. Delaware is primo for large corps that intend to go public someday but probably not suitable for our REI purposes. I’ve never seen an upside to FL corps other than inherent federal tax benefits that go with any corp, corporate officers are a matter of public record (which could be detrimental) but I do believe there’s no state income tax.
IMO, it’s much cheaper and way safer to pay the yearly resident agent fees in either Nevada or Wyoming. You get armor plated protection from vultures and no state income tax. The key to it all is to control everything, own nothing.
Do I care that I don’t legally own the bass boat as long as I can fish out of it whenever I want? Does it really matter who owns the car I put the keys into every day? Could I give a rats tail about what entity legally owns my home as long as I can get naked, drink beer and sing classic rock at the top of my lungs anytime I want? NO.
Does it matter that I control 100% and have complete enjoyment as I choose of these assets in a safe, legal and ethical manner? ABSOLUTELY!!!
Over the years, some folks have tried to gather info on me and my business entities and couldn’t. When I find out about it, I jump with joy!! Do you think that might fluster some scumbag personal injury attorney, creditor or even the IRS looking for an easy buck? They have no idea who owns what because of proper planning. Asset protection is a wonderful thing when you need it and it’s too late to buy it when you do need it…
Regards,
Dave
The non-profit corporation I use charges $40 per month for its services and the man that runs it is FBI trained, spent 20 years in law enforcement, has been in the real estate and mortgage industries since 1976, and is an appointed Referee and Receiver by the California Superior Court. I hope you’ll be able to form your own non-profit corporation and get that kind of expertise for $40 a month.
As to seanmathes’ question, it’s $199 for the trust agreement, and $125 for the deed.
A little story about how you think you are protected against someone who really wants to find out what you own.
A few years back I owned a Bail Bond company, you need a state license and get one by taking a test, background check, credit check, etc.
There was a person that was introduced to me that wanted to become a bail enforcement agent which requried that he have a sponser before he could get licensed. A bail enforcement agent is also known as a Bounty Hunter. This person was the Vice President of one of the largest corporations in the US. Private jet, drove the top of the line Mercedes and for the world of I still cannot figure out why he wanted to become a Bounty Hunter.
Anyway I sponsered him and used his services when I had someone “skip” on a bond I had written. A skip is someone who does not appear in court when required that you posted bond for.
One skip that still remains in my mind who was found in a trailer park in space 3 in northern Nevada that had 10 spaces and the name of the town was not even on the map.
His crew consisted of people who were retired from agencies that had 3 initials attached to them.
My point here is if you really think that you can hide anything, there are folks who can be employed that will find out everything about you if someone wants to know, take that one to the bank. You for instance already said you had business entities and even list one of them in your signature, go figure.
I understand completely, John. The only reason I use my title and company, to be completely honest, is vanity :-[ and the fact that I feel secure. If someone really wants to exercise that much due diligence to unravel it all, I feel they can have a shot at 100% of nothing.
Regards,
Dave
As to john’s remarks he is correct in a sense that the idea if somebody really wants you bad enough well what will stop them… but actually john there are numerous other benefits a land trust affords other than anonymity. I feel better knowing as least I have an extra roadblock to deter these opportunists from having at my assets…
If I get a chance I can check with the trustee on the amount of their surety bond but Im sure it is quite high…
Yes, it is a road block but let me relate a story about a seminar I attended.
There were about 6 course writers on a panel in front of the attendees answering questions from the audience and don’t you know someone asked about trusts. Well I listened to all the benefits (someone even said Oh Boy are we in for it, knowing my feeling on what some people think trusts do).
Then I said I can break a trust within a few minutes and of course the other panel members did the “show me” routine.
I said here is the senerio, you have been sued and you are now on the witness stand in a court room to answer questions about what you own.
I role played the attorney (still have nightmares), My first question was “do you own any property that you did not list on your assets.” The members answered no. “Are you the trustee or benificiary of any properties” and there was a silence. At this point they could either perjure themselves or answer truthfully. Just a few minutes to find any major assets.
Now there is a use for a trust combined with let’s say a Family Limited Partnership, where you are the General Partner with 5% ownership and your wife is a partner with 95% ownership, this is where an attorney finds out all he will get is 5% and will go away and you can add some more entities to take your protection and revenues to a higher level.
Many different ways to protect your assets like I say, but not with some of the methods folks have been led to believe they are protected with currently.
Most trustees if they are state licensed will have a bond for what the state requires, normally $25K or $50K. What this means is if your trustee goes south with everyones money or property, then the maximum amount paid out would be the bond amount, so if the trustee had let’s say $1 million in investors money, then $999, 950.00 would not be paid out to people that trusted him or her.
John,
I agree with your statement that yes through a court order a good attorney can eventually find out whom the beneficiaries of the trust are but from my understanding that does take some time and effort and without risking a fraudulent conveyance will give you time to asset protect ones interests or develop a strategy to counter what is happening and yes hopefully you have a another type of layering of your assets to protect them like the general partnership structuring.
The nice thing is if the trust was structured properly the UCC-21 filing from the lender charging order would only be levied againest the one beneficiary so the trust would not be pierced due to the non-partitionality of personal property held as beneficial interest ( Kenone on Land Trust -1989) so at least the other beneficiaries would not be adversely affected.
I did email the trustee on that question you posed on the surety bond amounts and let us see for sure what the actual amounts are. I will be very surprised if they are only covered under the state requirements…
Thanks for the dialogue john since in this we all learn…
Can we discuss what the implications are for tax purposes and for protection of cash and other assets that I already have? I also have a day job right now that brings in my main income.
I am not really that concerned with liability as my assets right now are not really considerable but my tax bill may be.
which were much more general in nature and have absolutely NOTHING to do with the specific types of trusts.