I apologize in advance for the question if it has been addressed previously…
For the purposes of asset protection (not automatically provided by a land trust) AND for avoiding the acceleration clause on a wraparound mortgage sale: I was wondering if it is advisable (or possible) to use a “normal” revocable trust (one normally used to avoid probate issues) instead of a “Land Trust”, and then assign the beneficial interest to the purchaser?
In other words, is there any substantial difference between a “Family Trust” versus a “Land Trust”? It would seem to me that the lenders are used to seeing transfers to family trusts, and that would be far less likely to raise any eyebrows than a transfer to a land trust (or LLC).
I am located in the state of California, if that helps to discern what is best for my particular instance.
First off land trusts do provide asset protection for your real estate and they legally avoid due on sale clauses by a lender if structured properly.
You are confusing family trusts with land trusts they are two separate entities and yes there are substantial differences. I am not an attorney and I suggest you get with one on family trusts but to my understanding they secure your personal assets and such.
You can use a family trust to protect your personal assets and use that entity as a beneficiary in the land trust which protects the real estate title of your property.
Just so you are aware under the 12 IRC 1701 (j) 3 commonly known as the Garn St Germain Act of 1982 section 8 stipulates that any borrower on the deed of trust can vest their property into an intervivos land trust as long as there is not a transfer of occupany and that person is and remains A beneficiary of the subject trust.
AS to your question on normal revocable trust well the land trusts I work with are revocable beneficiary directed trusts.
If you wish to protect the real estate asset use a land trust and a family trust for your other assets and estate planning.
For the best asset protection in a revocable trust be sure to assign multiple
beneficiaries, that way a creditor or attorney charging order in most cases can
not pierce the trust due to a creditor can not partition personal property and that is what beneficial interest in the trust is in 48/50 states in the country.
As to the probate in a propertly structured land trust probate is avoided by assigning beneficial interest to a co-beneficiary or remainder agent due to rights of survivorship. If something did happen to you the co-beneficiary would take over or you can heir your beneficial interest to whomever you like.
Just so you know the land trust in Californina follows all state civil regulations and of course federal law…
If I can assist further feel free to contact me my info is on posting .
The transfer of the right to occupy the property triggers the due on sales clause. Masking it with entities doesn’t change the law.
Revocable trusts provide no asset protection because the judge can order the beneficiaries to assign a new trustee friendly to the creditor. They are called revocable because they can be changed.