I bought a real estate coarse that talked about revocable living trust, and that you should have two one to buy/sell and one to hold property/$$…until you can form an LLC. The coarse also came with a cookie cutter type trust that is related to real estate. Is this a good alternative till I can set up an LLC. Any information would be great Thanks
i’m not an expert on trusts - but a living revocable trust - what would be the point of owning your investment properties in living revoc trust?
you would use the living trust to protect you assets and use the trust to buy and sell property.
A revocable trust does not provide any asset protection. A revocable trust does not provide any relief from federal estate taxes.
A revocable trust does let your trust assets avoid probate in the event of your death, and, a revocable trust may provide some measure of anonymity provided you are not the trustee.
I think the value of a trust for the purpose you describe is very highly overrated.
I think the idea of the coarse was that if you don’t have a LLC you should not buy real estate in your own name, and should buy the property as a living trust.
Revocable trusts are estate planning tools people use to avoid probate and manage their assets in the event of incapacitation. It has not asset protection benefits because you maintain 100% control of the assets. Irrevocable trusts do provide asset protection and some states even allow you to set them up for yourself. They do provide a bit of privacy from the casual public record search, but that goes away during a lawsuit.
An LLC is a business entity to run a business that provides some separation between the owners and business liability.
One of the big values in titling RE in a trust or LLC that do not bear your own name, is the anonymity it provides.
A lawyer these days, when first talking to any new client about suing anybody for anything, particularly if its about possibly suing for a tort or personal injury happening on a possible Defendant’s RE, does a desk computer search to see who owns the RE in question.
Also, even if the injury or death did NOT happe on or because of defendant’s RE, the lawyer is looking to see what RE the possible D might own…and I’ll tell you from personal experience, it’s discouraging to that lawyer to find zero properties owned or titled in the D’s name.
I’d guess that probably such a negative finding of assets owned by the possible defendant is going to deter the lawyer looking, to such an extent that he/she’s NOT going to be taking the case without a hefty cash retainer fee being paid by his client.
Ergo, lawyer not interested and client not willing so nothing further happens.
We had a local REI turned speaker/educator/guru, Wade Cook, and ol’ Wade was a mighty shrewd guy in his hayday and I used to go to his free &/or cheapie day long seminars and I never failed to learn something from WC.
He said, more than once, that he’d been taken by somebody for something and when he learned that the other guy had no RE in his own name, but had (as per WC’s own advice put all his assets in either a trust or LLC, he basically knew then and there that he was chasing mist and wasn’t going to be able to forcibly collect what he was owed.
While it is true that once a final court judgment is obtained, then the D must divulge on proper legal discovery what he owns, including trust interests and/or LLCs, that info is NOT discoverable legally prior to that point as it’s legally irrelevant prior to the final J being taken.
So the costant refrain I see on this site that an LLC and/or Trust is of no value, can be penetrated, etc. is in large part missing the point that such entities ARE of substantial value in the anonymity they provide and the lawsuits that are never filed.
Lawyers today are pretty sharp and know that most people don’t follow the corporate formalities. They also have investigators that can find assets hidden in trusts and LLCs. Discovery is not required. The only real question is the merit of the case. They won’t take a loser and usually settle for insurance limits anyway, LLC, trust, or not. Lawsuits are easy to file and most attorneys I know file first and search later.