Can anyone tell me about trust, I know they can help protect my assets but I don’t have any of my homes
in a trust yet. How do I set up trust. Would it be a good idea to put each house in a trust?
How can a trust help me with my taxes with my business?
I want all the tax breaks I can get but I also want all the asset protection I can get, I don’t want something happing
at one property and costing me on another property also.
Simply put, a trust will give you anonomity…however the first question by any good attorney in a deposition interrogation will be, “Do you have any assets in partnerships, trusts, LLC’s, etc” and you are stuck.
Trusts will stop most people from looking further than the local recorder office. Your name will not appear there, only the name of the trust and the trustee will appear.
However if you do something bad wrong and are called into deposition…nothing will protect you.
Yes, I know some will say a LLC will but in essence it will not if it is a single person LLC… the logic here being if you are the only one to protect and you did it why do you deserve protection? The corporate veil will be pierced and you will have no protection.
Husband and wife are considered a single person LLC.
What you’re looking for is called a “Land Trust.” This is a privately prepared trust agreement between you and whomever you select to act as your Trustee. Preferably the last name of your Trustee is different from your last name. The document is signed and notarized but NOT recorded. You simply keep the notarized Land Trust in your personal file. You also then re-register the formal title of the property from your name as owner to your Trust’s name as owner with “Name” as Trustee.
Bill H correctly stated that the primary purpose is to provide you with anonymity. It’s a “poor man’s” asset protection document. If you’re just starting, this is a good first step. When/if you continue your RE investments, it would be worth hiring an atty to set up a more formal asset protection program regardless of which approach you select.
Be advised that even to this day, many title companies and escrow officers don’t understand Land Trusts and may give you some flack accordingly. You can tell them to contact their Chicago office for an education on this topic but you’re probably better off just finding an escrow that does understand Land Trusts.
Also be advised that if financed, you may be required by the lender to take title in your name first because the lender wants to make sure you are on-the-hook for the loan. No problem - just re-register into your Land Trust after the loan is granted and the initial purchase has been recorded. Selling has never presented a problem for me because I always made sure I was (again) working with an escrow that did understand how Land Trusts work.
This does NOT prevent the domino-effect you indicated you also wanted to avoid. To accomplish, you must put each property into its own SEPARATE entity such as a LLC or whatever your atty advises. That way, if one property is hit with a lawsuit, the other properties are not automatically included in that specific suit.