I read the 27 reply post re: land trust yada yada yada.
Holy crap. A year ago, I would have given up reading, because I was a lazy piece of crap.
So I get through the whole post, after reading each reply, 3 times, at least…and by the end, I’m totally confused.
I buy land.
I “set up” a land trust, naming LLC as bene.
HOLD ON.
A land trust is set up to protect and conserve the land blah blah blah.
I guess I’m not following how, I, as a member of LLC, benefit from putting our acquired properties in a land trust, when I have involve a third party, ie a lawyer or non-profit org.
The more people get involved in your biz, the more hazardous it seems. Or this maybe my mind telling me “you shouldn’t do this” because it still operates on a small thinking level.
I understand your confusion as certain posters, jealous of the asset protection and flexibility of a land trust try to cloud the issue.
You buy your property, place it into a land trust and name your non-profit Trustee who takes title. You then assign a beneficiary interest in the trust to your LLC. That’s it. The LLC protects your personal assets and the Trust protects the property.
I have a S Corp set up to be trustee and manage my properties. Is this o.k.? How does the S Corp sign as trustee, i.e., do I sign as follows: S. Smith, president of Jay Corp., Trustee? Is it o.k. to be a member of the beneficiary LLC and a shareholder/Officer/Director of the S Corp Trustee?
Thanks. You seem very knowledgeable about Land Trusts.
USING ONE’S OWN CORPORATION would create a merger of title, invalidating the trust, should it be challenged in court as not being a bona- fide land trust (see N.C. A.G.O. vs Russell and Dianne Barberio 2005)
A privately or closely held corporation would not charge legitimate fees and therefore would not likely be seen by the courts as a bona fide holding company, whose business it is to hold titles in trusts and charge fees commensurate with industry standards.
One’s own corporation would not be seen by a co-beneficiary as a mutually trustworthy, and wholly unbiased third-party holding (“escrow”) entity. Such a bias would not be in the best interests of co-beneficiaries. As well, using one’s own business entity would create a merger of title invalidating the land trust model.
That’s why I recommend people use a third-party non-profit corporation, a professional non-profit entity specifically and solely engaged in the holding of titles in land trusts.
If you’re going to use a land trust, be sure that you have considered these factors. It is important that it be properly structured to provide armor plated asset protection.
Thanks for the response. Who are these non-profits and where do I find them?
Also, I am still a little confused on how this transaction works with the land trust. One of the reasons that I want to use a land trust is to prevent the lender from calling the DOS when I take “subject to”, so I am confused on how the player take part in the game.
Can you give me a scenario using the following players:
Seller Smith
Buyer Me LLC; and
Non Prof Trustee. (I think that is all the players, right?)
Trustee = Non Prof
Trustor/Grantor= who?
Beneficiary=who?
Do you keep Seller Smith on as a beneficiary or a co-beneficiary? How is this done?
If this trust is revocable, how does this secure for me, Buyer Me LLC?
Seller Smith agrees to remain on the loan and have you take it over. You pay for his trust and it is set up in his name with a non-profit Trustee. Seller retains 10% int. in trust and assigns you 90%. You are safe from the DOSC.
You find a tenant/Resident Beneficiary to live in the property. You make him an owner of the trust so he is entitled to writeoff mort int and prop taxes. Now, Seller owns 10%, you own 40%, your Tenant has 50%.
At end of term, tenant refis and buys property. Seller’s mtg is paid off and he gets previously agreed upon equity. He is paid off, then assigns his 10% to you.
Don’t worry about it being a revocable trust. Remember, when you acquire a beneficiary interest you are also an owner of the trust and it is only revocable if ALL the partners agree.
As to the identity of the trustee, I will PM you to keep in accordance with posting rules.