About 15 years ago I pit a dozen single family rentals in a living trust to avoid probate. Now I see the new rage promoted by gurus to sell the course is to put things in a land trust then a LLC. Since ALL of my deeds are registered in the living trust name , is there any advantage to now forming individual land trusts . Could the properties be put into an LLC and still be covered in the living trust?
Bermadeast,
My question is what are your asset protection/planning goals.
You would have a greater liability leaving your setup as it is since if a creditor or lien attached to the property you would have little protection once they find out you are the beneficiary of that family trust…
Most living trust are of the single benficiary type and are mostly used to avoid probate issues.
You can put the properties in a LLC and I know with the NARS Equity Holding trust product you can put up to 4 properties into each land trust.
When you setup the beneficiary trusts you would designate your trustee who for best protection should be a living corporation.
To get the best protection you would take your LLC and vest that entitly into a land trust. Make sure it is a beneficiary directed revocable Illinois type land trust. Multiple beneficiaries provides better protection than the single beneficiary setup.
I would get with a good experienced estate planning/tax attorney and lay out exactly what you want to see done.
I hoped I helped alittle bit
colvegas,
Isn’t a land trust just a form of revocable trust with only one asset – real estate? If so, then why should bermadeast change his existing trust?
Unless there is some risk mitigation to be gained by diversifying his real estate holdings among multiple trusts, I don’t see what a “land trust” will do that his living trust won’t. Perhaps you could elaborate.
I understand that asset protection could be enhanced by including LLCs in the asset holding structure, but my question is only directed to the trust differences.
While the living trust and and land trust are both revocable living trust there are important differences. The living trust usually has the grantor, grantee and trustee as the same person. As such it provides very little anonimity and no protection. In a properly set up land trust the trustee holds both legal and equitable title but is directed by the beneficiary. This gives anonimity and some protection from judgements.
Title will be held by the land trust trustee but you will still control and report to the IRS as yours. When you combine with LLC you get more liability protection. But do not feel comfortable with multiple properties in one LLC. If a property in an LLC is attacked on a law suit and the party wins all of the assets of the LLC are open to sale to satisfy the judgement. They can not do the same to another LLC that you own. They can only get a charging order. If title were in the land trust only the grantor, grantee and trustee know the true date of assignment of any other property in the original attacked trust. And if you are married they can not even tell from a joint return which spouse owned what.
Of course you will also have liability insurance and maybe even encomberance liens.
Thank you bud you are right on the money with your explanation of the differences between the single beneficiary living trust and the Bill Gatten NARS trust which is a revocable and is built upon the Illinois type trust.
The main focus is that the NARS trust deals with the issues investors and buyers and seller face in protecting their property from any type of liens, martial disputes, untoward actions by any party etc.
The multiple beneficiary setup best benefit in my view is the non-partitionability of a property in a NARS or similar type land trust.
There can be no claim on equity due to the law of equitable conversion doctrine. So if for example one of the beneficiaries in your trust encounter a creditor charging order the creditor can not partition the property due to the profile of the property changing from realty to personlty.
The list of benefits goes on but dave just so you see most living trusts to my knowledge deal mostly in probate avoidance not securing the property (asset) from any type of legal issues that could arise.
IN the NARS trust under bill gatten’s system in his EHT trust system there are 40 benefits to using them in your R/E transactions.
If you forward that to you if you me your email.
Thanks for the question since hey we are all learning this stuff!!
Bud,
I personally do not think that the benefits of a NARS trust is great enough to justify the hassle. Nor so I think the anonymity or asset protection is significantly, if at all, greater than that provided by a normal revocable trust…certainly not enough to justify costs in time & money.
I am also aware that debating this will take quite a bit of time, time that I will not have until after 4/15. Just a friendly heads-up that I mean to revisit the issue from a dissenting point of view.
John Hyre
John,
Yes I agree there are expenses as far as the trust setup and trustee fees for the NARS system.
If you are a NARS member and there is a cost and you do volume amount of trusts the cost savings will in my opinion more than justify the cost factor involved. My view is if something is that good there is always a price for it…
I am biased toward the trust but if there are other type trusts that provide similar or better protection Iam all ears …
If you do know of any in all due respect with you being an attorney that provide that and is cost effective please let me know.
As long as bud is legally protected and his LLC setup is correct and only a good legal estate planning attorney or yourself can ultimately provide that service.
I just like the idea of investing using land trusts especially when you are working with different investor groups.
Well John it is good to meet you amd Bud good luck in your trust setups…
Bill Bronchick also has a very good land trust course and is very knowledable in these subjects and asset protection in general.
I