A reason someone might use an LLC as 90% beneficiary and the seller as 10% beneficiary might be because the property (house) may be subletted by the LLC (buyer), and the LLC may have some better liability protection in case of a “slip & fall” accident and lawsuit on the property by the tenant.
but, you are correct. you can have the Buyer be “Tom M” and seller be “Dick H”
doesn’t holding title in a land trust make it much more difficult to be sued in a “slip and fall” situation?
Because the real property is considered personal property and while the Trustee holds the title, they are not liable for the personal property of the beneficiary(s) - who are not in the public records - as the Trustee is listed as holding title…
I guess the LLC is just another layer of asset protection…but is it necessary in this circumstance?
Regarding ownership in the land trust, one’s beneficiary interest (being intangible personal property versus real property) provides a high degree of protection (though not absolute insurance) against a judgment creditorï¿½s partitioning of one party’s interest from that of another: thereby forcing the sale of part of the property or liquidating it and dividing the proceeds. To best protect against such an event, it is prudent and highly advisable for land trust participants to hold their respective beneficiary interests in a Limited Liability entity such as, say, a Limited Partnership or a Limited Liability Company (LLC). In so doing, each beneficiary can then be free of concern about the accidental or untoward misdeeds of the other (i.e., dealings that could otherwise easily involve the property’s title by either party’s creditor’s claims, tax liens, bankruptcy, legal actions in marital disputes, probate, etc.).
“Since the interest of the beneficiaries under a land trust is personal property, and since the trust agreement expressly precludes the vesting of any legal or equitable right in a beneficiary, partition is not available.”
I see how that works Mtn. LLC affords protection from lets say, spouses from interfering in the business of the LLC - in this case, if LLC was a bene in Land Trust, the spouse could simply be bought out (given current share of biz) according to operating agreement of LLC. Plus the LLC op agreement gives all sorts of other protections, not to mention the basic legal protections regarding personal liability.