Using Land Trust

Using Land Trust "Just another strategy for investors"



Its uses are:

To control or purchase real estate

To protect confidentiality

To limit liability

To help with "DOS" clauses in some cases




Land trusts have been used since the late 1800's in one form or another and became recognized by statute or case law in many states.



A land trust is a vehicle that holds real estate nothing more nothing

less. The trustee has the power to convey or deal with the property at the
direction of the trust beneficiary. The beneficiary, on the other
hand, retains the power to use, convey, or manage the land and holds
any other number of rights as directed by the beneficiary and the
trust agreement.



The process in it self is simple:



The owner of the subject real estate transfers title to the property
over to the trust by way of deed and enters into a trust agreement
with the trustee and a beneficiary agreement with all beneficiaries.



A trust is just an agreement to hold or manage assets by a trustee
for the benefit of another. Different types of trusts are used based
upon needs and goals. They will vary in use, flexibility, control and
asset distribution so I have taken the liberty to share some
information about other forms of trust below.



Personal Residence Trust - A personal residence trust involves the
transfer of a personal residence to a trust with the grantor
retaining the right to live in the residence for a fixed term of
years. Upon the shorter of the grantor's death or the expiration of
the term of years, title to the residence passes to beneficiaries of
the trust. This is an irrevocable trust with gift tax implications.



Qualified Personal Residence Trust - A qualified personal residence
trust (QPRT) involves the transfer of a personal residence to a trust
with the grantor retaining a qualified term interest. If the grantor
dies before the end of the qualified term interest, the value of the
residence is included in the grantor's estate. If the grantor
survives to the end of the qualified term interest, the residence
passes to beneficiaries of the trust. A QPRT is a grantor trust, with
special valuation rules for estate and gift tax purposes, governed
under IRC 2702.



Living trusts - Are created during the lifetime of the trustor.
Property held in a living trust is not normally subject to probate
(the court-supervised process to validate a will and transfer
property on the death of the trustor). In Washington, because such
property is not subject to probate, it need not be disclosed in the
court record and confidentiality may be maintained. Such trusts are
widely used because they allow the trustor to designate a trustee to
provide professional management.



Testamentary trusts - Are created as part of a will and must conform
to the statutory requirements that govern wills. This type of trust
becomes effective upon the death of the person making the will
(the "decedent") and is commonly used to conserve or transfer wealth.
The will provides that part or all of the decedent's estate will go
to a trustee who is charged with administering the trust property and
making distributions to designated beneficiaries according to the
provisions of the trust.



To create a legal trust you will need a trustor, trustee, beneficiary, trust property and trust agreement.



You can be appointed as Trustee and run all the day to day business
affairs of the Structure or you can appoint another.



The trustee has no personal liability in their capacity so long as
they operate within the bylaws of the contract on behalf of the trust.



A trustee normally will act in accord with the express terms of the
trust instrument; act impartially, administering the trust for the
benefit of all trust beneficiaries; administer the trust property
with reasonable care and skill, considering both its safety and the
amount of income it produces; maintain complete accounts and records;
and perform taxpayer duties, such as filing tax returns for the trust
and paying required taxes.



When using a land trust it is best not to name yourself as trustee
because A trustee in general must administer the trust property only
for the designated beneficiaries and may not use trust principal or
income for his or her own benefit. In other words, a trustee is
usually prohibited from borrowing or buying from the trust, from
selling his or her own property to it, and from using the trust
assets as collateral for a personal debt.



While trusts can offer a number of tax advantages, tax avoidance, and
provide confidentiality this should never be your sole motivation for
using this strategy.



Basic Documentation Process of a trust is:
The Land Trust Agreement
The Assignment
The Beneficiary Agreement



The trust is normally created under the name of the current property
owner or the property address.



Trust will also help with:

Protecting Assets From Lawsuits

Protecting Assets From Business Failure

Protecting Assets From Governmental Seizures

Protecting Assets From Tax Troubles

Protecting Assets From Divorce




Trust will simply make your assets private and if set up properly
should convince any litigant that, it will be impossible to collect.



Support of Land Trust
Wellenkamp vs. Bank of America (8/25/78) (50 USLW 4916) 73 L.Ed.2d
664, 10 S.Ct. 3014 (1982)



Fidelity FSB vs. de la Cuesta (6/28/82) Regulations Act of 1982 -
(FDIRA) (10/15/82) 12 USCA sec. 1701-j-3



GARN-ST. GERMAIN EXCEPTIONS Governing Land Trusts
http://www4.law.cornell.edu/uscode/12/1701j-3.html



This form of investing is another tool to help you as an investor and
help your customers as well.



As an investor, you need more than just a few tools in your investors
toolbox.



I have uploaded a zip file of land trust forms for your use - check the free downloads area of TCI.



Enjoy my fellow investors - to your success!