LLC's vs. Land Trust's
I personally like the flexibility of a Land Trust.
Does anybody else disagree with me?? What purpose would you put your properties under an LLC instead of a Land Trust?
To make it even more complex, what about a Manager Managed LLC that has beneficiary intrest in a Land Trust??
Or how about a Land Trust with an LLC as the trustee under a Property Management Corporation?????
It's amazing what the mind can conceive
John
A little bit more serious reply to the above post is by putting a property in a land trust with a LLC as trustee is probably the safest way to take the property. I really like the post I saw earlier limiting 3 properties in trust to a LLC as trustee. Then forming a new LLC and repeating. This keeps down the expense of the LLC, (which we discussed before) and limits the liability giving max protection.
John
It is my understanding that a land trust affords the property owner privacy and a certain measure of asset protection.
The LLC limits its members (owners) liability to their contributions to the company. The LLC shields its members from personal liability against lawsuits against the company. This means that my personal property is not at risk from a lawsuit arising from the LLC operations.
A land trust and LLC are not mutually exclusive. You could use the land trust as a title holding device with the LLC as beneficial owner, then find an unrelated, out-of-state individual to serve as trustee. Your trustee agreement would give the LLC all property management and maintenance responsibility, with the trustee only acting when needed to effect a property transfer.
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I agree with you completely on the setup for maximum liability protection, and would like to add one more layer. If you are going to own multiple properties, each should be in a separate Land Trust, and a LLC (or LP in states like PA and TX because of the tax issues) should be the beneficiary of 3 or 4 land trusts. The addition that I have been reading about is that an S-Corp should be a 1% GENERAL PARTNER in the LP, and you should be the Limited Partner. If someone sues the LP, they are suing the corporation for it's 1% interest in the LP, since the only person who has liability is the GENERAL PARTNER. The limited partners can vote to replace the General Partner AT ANY TIME, so long as they "buy out" the GP for their share of the LP. Does anyone see any "holes" in this type of setup? The other question I have is can the same corporation be the general partner for multiple LP's, or does that subject you to more liability, since the corporation has a larger amount of assets? If it is better to use multiple S-Corps, is there a way to set up a MASTER entity of some type so I would not have to keep multiple sets of books, bank accounts, etc.? Thanks.
On 2002-04-07 13:17, DaveT wrote:
It is my understanding that a land trust affords the property owner privacy and a certain measure of asset protection.
The LLC limits its members (owners) liability to their contributions to the company. The LLC shields its members from personal liability against lawsuits against the company. This means that my personal property is not at risk from a lawsuit arising from the LLC operations.
A land trust and LLC are not mutually exclusive. You could use the land trust as a title holding device with the LLC as beneficial owner, then find an unrelated, out-of-state individual to serve as trustee. Your trustee agreement would give the LLC all property management and maintenance responsibility, with the trustee only acting when needed to effect a property transfer.
JMATTERO:
I think you may have the possibilty of double taxation re: use of an s-corp as the 1% general Partner in addition to IRS arms-length restrictions--unless you have another shell entity or corp. officer highered by the Trustee to handle collections and Property Mgmt!
To answer you question on master entity: you could research NARS (No American Realty Services) PACTrust(tm) or NEHTrust(tm).
These proprietary method of arranging LandTrust have been structured as Annuities, 1031 Tax Free Exchnges, Self-Directed IRAs, and more!
To learn more about them here on TCI check out Articles by myself: DERRICK ALI!
Should you need my assistance do not hesitate to contact me! My time is yours!
Sincerely,
Derrick Ali
[addsig]
Don't you mean having the LLC as the beneficiary, not the trustee. The trustee has no liability in a normal trust situation beyond fraud or other criminal acts.
The beneficiaries would direct the trustee regarding the activities and operation of the trust.
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On 2002-03-09 22:13, jfmlv1950 wrote:
A little bit more serious reply to the above post is by putting a property in a land trust with a LLC as trustee is probably the safest way to take the property. I really like the post I saw earlier limiting 3 properties in trust to a LLC as trustee. Then forming a new LLC and repeating. This keeps down the expense of the LLC, (which we discussed before) and limits the liability giving max protection.
John
I'M FROM PA. HOW DO YOU AVOID THE TRANSFER TAX WHEN PUTTING PROPERTY INTO A LAND TRUST? WHAT IS A LP AS OPPOSED TO AN LLC OR LAND TRUST??? SOME SAY USE CONTRACT OF SALE OTHERS SAY TAKE SUBJECT TOO OR LEASE OPTION. AND JUST RECORD THE APPADAVID ?? OF SALE TOCLOUD THE TITLE.
redeals,
Thank you for pointing that out. Fingers must have slipped on the keybroad; there they did it again.
John