Mechanics of Transferring to Land Trust in Austin

General Real Estate Investing
1

Hi Y’all,

I am hoping someone can help me fill in a few gaps in the steps of putting a property into a land trust.

My goal is to transfer ownership from my name to my S Corp’s name for tax purposes without triggering a due on sale clause for my loan.

I have an Illinois Land Trust form, but I have the following questions about filing it:

  1. In filling out the form, I assume that I list myself as the Grantor & Beneficiary and name someone else as Trustee, right?
  2. I do not see a place on this form to list the name of the trust. Where do I give the trust a name?
  3. Once filled out, do I file it with the County Clerk in the county the house is in? (In this case, it is Williamson County)
  4. Is there anything else I need to do at this point?

Once the trust is created, I assume I can then change the beneficial interest to my company, and I have a few questions about that, too:

  1. Does anyone have an assignment of beneficial interest form that I can use?
  2. Where does that form have to be filed? With the County Clerk? The Trustee?

When I sell the property, will the loan I have on it show up as needing to be paid off at closing even if the title is held in the Land Trust’s name & not mine?

And one last question. Since I am trying to shift the taxes & deductions from this property to my company, is there any reason I have to have this done by the end of 2003, or can I take my time? I expect to sell it in 2004.

Thanks in advance for he help!

Avery

2

I can help some but am not familar with the form you are using. The beauty about Trusts is that they need not be filed anywhere. You can file if you wish by adding the legal description of the property and notarizing the signatures. A lot of investors use this to hide the ownership of the property. Once deeded to the trust that is all that is required. The address will have to be on the deed but that is about it. The change of beneficary does not have to be filed either. Keep several copies of all this stuff as you will need it to sell the property. You would need to file the deed with the county transfering the title from you to the trust. I can help you do this if you need help.
Have you already paid taxes and insurance already. If not use the trust name and get a receipt. If paid it may be too late. I would treat as paid by the company no matter what but that is totally up to you. You will get the deductions either way to offset any rent etc either way.
I hope some trust experts can help with other questions and let me know if I am wrong somewhere here too. It is always a learning process for us all.

Happy Holidays and Thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austi

3

Have you looked into just putting it into an LLC, with a name like “1234 House Street Name, LLC”?

I’m curious why you’re doing an S corp and not an LLC?

I think this whole Land Trust thing is eventually going to start falling apart, here in Texas.

4

Avery,
I’m not familiar with the form you have as I use a modified version of Bronchick.

  1. Trust doesn’t get filed, except in your cabinet.
  2. Deed evidences ownership and that’s what gets filed with county. You sell/convey from you to your trust.
  3. I don’t see any reason to jump through the assignment hoops?
  4. I use one entity for trustee and another for beneficiary, depending on whether it’s a keeper or cash deal.
  5. Yes, the original DOT will still be in place when you sell so the loan will have to be paid.
  6. Tax ramifications are determined by ownership so there’s not a time issue.

Hope that helps…