Why do you utilize the PAC trust over the Illinois Land Trust?
Why Use the PACTrust Over the Illinois Land Trust?
The PACTrust and Illinois Land Trust are both popular tools in real estate investing, but they serve different purposes and offer distinct advantages. Here's why you might choose the PACTrust over the Illinois Land Trust.
Note: While both trusts offer privacy and some protection, the PACTrust provides more flexibility and protection features, especially in creative real estate investing scenarios.
- Greater Asset Protection: The PACTrust offers more comprehensive asset protection than the Illinois Land Trust. It allows for multiple beneficiaries and incorporates features that protect against judgments, liens, and legal challenges, which are not typically covered by the Illinois Land Trust.
- Enhanced Privacy and Anonymity: Both trusts provide privacy by keeping the ownership of the property out of public records. However, the PACTrust adds another layer of anonymity by structuring the trust so that it is difficult for outside parties to determine the true ownership of the property.
- Shared Equity Features: The PACTrust is designed to facilitate shared equity arrangements, which means multiple parties can benefit from the appreciation of the property over time. This is particularly useful in creative financing strategies where the seller, buyer, and investors may all share in the equity.
- Tax Benefits: The PACTrust can offer unique tax benefits, such as the ability to structure payments in a way that may minimize capital gains taxes, maintain mortgage interest deductions, and provide other tax advantages not typically available with an Illinois Land Trust.
- More Flexibility in Creative Financing: The PACTrust is a more flexible tool for creative financing techniques, such as lease-options, wraps, and “Subject To” purchases. It allows for more complex arrangements that can accommodate the needs of all parties involved.
- Protection from Due-On-Sale Clauses: The PACTrust is specifically designed to provide protection against due-on-sale clauses in mortgage agreements. This makes it a better choice for investors looking to take over existing loans without triggering the lender's right to demand full repayment.
- Greater Control for the Investor: The PACTrust allows for greater control over the property, including the ability to manage and direct decisions related to the property without interference from other parties, which is more restrictive in the Illinois Land Trust.