Nuthin to hide here but lots of GOODIEs can be picked up, re-sold, both in part and parcel using land trust that you just wouldn't be able to legally, inexpensively nor safely do without one.
I can think of 40 or so reasons...that come to mind.
BTW---Why do you think that 'Hiding' is the only reason or benefits of using a trust? Is this just an opinion you've come by from reading posts or what?
I talked to my attorney about these and although he would be more than willing to do them for me (and make money in the process) he does not see any really good reason to do them. He knows people that do, he has clients that he does them for. He personally does not, and he has about 8 houses, 2 30+ apt buildings and they are in his and his wife's name. Apt complexes are in his corporate name.
I have Mike Warda's Land Trust book and have almost finished it, I could see if I was a millionaire that I would want too hide all my transactions from the prying public but I would do that in other ways.
A court can ask you if you have any property, are a beneficary to any property or part of a company, LLC, S-Corp etc that has a beneficial intrest in any property and then you have 2 options, 1. Perjur yourself or 2. tell the truth and say yes.
Another thing is that any fairly smart Jo Public can pull up the property on the assessors office website, see who the company is, and then go to (in Florida) http://www.sunbiz.org and find out who the officers are in the company, this will show your name.
Now by putting a trustee as a person will hide that one aspect but now WHO do you really trust to be your trustee since he has full legal and equitable title.
If you are in a car wreck and its your fault. You ran through that traffic light (heck it was only red for a second) So the guy you hit has a little ache in his neck. He calls an atturney to take it pro-bono. Atturney does a property search and you have 2 cars in your name (normal) one house, but wait here are 16 other rental houses. He looks to the clients and shouts I"LL TAKE IT. You are a walking targer for lawsuits. Anyone thinks you are a RE investor than you have money. Now with a Landtrust all that property is hidden and he just pulled up you 2 cars. He then tells the guys in his office leave and go waste someone elses time. There you go!
Sire
When you set up the land trust, you can also have other beneficiaries at the same time, executed at the same time and keep them in a safe confidential file. You don't even need to tell them because you are just keeping it in case you need it. If you are asked if you are the beneficiary, you have another beneficiary that you can show and deliver at that time, dated way back when you set it up.
You askedQuote:Now by putting a trustee as a person will hide that one aspect but now WHO do you really trust to be your trustee since he has full legal and equitable title.
I use Equity holdings corp. or PACHoldings Corp.(a 3rd Party non-for-profit corp.)
Although a bit costly you could us a local Bank & Trust co. or Title & Trust co. that could work just as easily.
Better than an out of town relative, friend etc., even safer than an atty. (you Avoid probate as a corp is not likely to die and also not likely to swindle you all the same.)
Can you explain more about the Equity holdings corp. or PACHoldings Corp?
Do I set them up or are these other corps already set up and in the business of being trustee's?
If I set them up, who are the officers? Can't be me as again I would be bene and anybody could find that out.
Thanks
Quote:
On 2004-04-14 15:50, DerrickAli wrote:
REPrincess:
You askedQuote:Now by putting a trustee as a person will hide that one aspect but now WHO do you really trust to be your trustee since he has full legal and equitable title.
I use Equity holdings corp. or PACHoldings Corp.(a 3rd Party non-for-profit corp.)
Although a bit costly you could us a local Bank & Trust co. or Title & Trust co. that could work just as easily.
Better than an out of town relative, friend etc., even safer than an atty. (you Avoid probate as a corp is not likely to die and also not likely to swindle you all the same.)
Can you explain more about the Equity holdings corp. or PACHoldings Corp?
EHcorp is a non-profit 3RD Party Trustee Corp. based in California. Owned by a Fine Gentleman by the name of Thomas Skanden.
EHC holds title for EHTrust(tm) Deals - where there is a two-tiered Owner Carry financing scenario (involving a Seller+Investor+New Buyer aka RB)
PAC Holdings Handle one tier Trust scenarios called the PACTrust(tm) Where there is only the Seller and the Investor as beneficiaries in the trust..
Quote:Do I set them up or are these other corps already set up and in the business of being trustee's?
I use NARS to set up the Simple trust and nominate EHC or PAC to act as the 3RD Party TRUSTEE.
Quote:If I set them up, who are the officers? Can't be me as again I would be bene and anybody could find that out.
RE Princess (btw- I Like your name),
you along with all the other beneficiarie of the Trust CONTROL (read: Direct) the TRUSTEE. the Trustee can only act act the mutually agreed upon request/direction of ALL BENEFICIARIES.
To keep things simple NARS has boilerplate addendums and other components that helps everyone involved in the transaction TO GET WHAT THEY WANT UPFRONT!!!
Additionally, Bill Gatten (wner of NARS) designed the PACTrust(tm) / EHTrust(tm) TO BE FAIR & HONEST so as to Create A Win-Win-Win scenario with loads of safeguards for those "JUST-In-CASE" should things (read: MINDS) change after the trust is established!
there are other reasons besides HIDING the assets.
to own in Separate trusts is still safer even if the Plaintiff knows about all of your holdings.
If I own 5 houses and someone gets hurt on premises of one of my properties then they have the right to sue the owner of the house.
If their lawyer is good and makes the connection that I am beneficial interest to that house and 4 others he may try to sue the trust of the house that "injured him" and also sue the other 4 trusts and he can sue me personally as well.
I will still have to pay a lawyer to defend me. So its still going to stink and even cost me money. The thing is, he wont win those other suits.
If it is done right the separate trusts insulate your assets against a lawsuit vs. any of the other houses.
If 123 Main St trust gets sued, you cant necessarily win the same suit against ABC Main Street Trust.
you could also accomplish the separate protection by having a separate Corp. for each house or (LLC), but setting up each one and bookkeeping may cost more in money and time.
I am a believer in insurance. Yes hiding your identity with LLC and Land Trust will prevent some minor lawsuits because you will be hard to find. But when the pit bull severly injures someone on your property, near your property, or across town from your porperty - you need to have insurance coverage, because they are going to find you.
Went to a Land Trust, LLC one day seminar on asset protection last week and the man started with the fact that everyone should have a liability umbrella and that was the single most important thing to have. Then you should worry about Land Trust and LLC for protection. Exactly my point. But another point is that LLC and Land Trust are difficult to to get umbrella coverage for. And if you can get it, you will need a different policy for each Land Trust and LLC. Each land trust, each LLC and you as an individual are usually treated as different entities. Last point is that if you have multiple LLCs you must keep them seperate and not comingle any money between them or with you as an individual or they will not provide you with any protection. They must be treated 100% as a valid LLC. So keep your minutes, file your forms, watch the accounting.
>>
I still use land trusts for chain of title but I do not use them for asset protection.
A land trust was suggested to me in another area of the forum. I'm not wanting to hide ownership or anything like that. The advantage I was told was that when it came time to actually purchase the property I'm wanting, it would be treated as a refinance as far as LTV was concerned, i.e. the value would be based on appraisal rather than purchase price. That would be important to me as we're hoping to lease the property for a year, make improvements over that time, and then proceed with the purchase. The land trust was suggested as an alternative vehicle. This, btw, was on a commercial property.
I still don't know that much about them tho. I've searched the forum and the "hiding" feature seems to be what everyone discusses. Even in response to this original question, I'm not reading responses of any other advantages other than privacy.
Would they help with situations like mine? Is it true that when it's time to "buy" the property, LTV would be based on appraised value?? Is there any seasoning issues, if so? Who would be trustee and who would be beneficiary in this type of situation?
Land Trusts can help with Chain of Title or Seasoning issues (they are the same thing).
If you "buy" a property by putting it into a land trust, it helps to hide the "buy" and appears to be more of an estate planning device.
Mr. Smith creates the SMITH FAMILY LAND TRUST. He is beneifciary and you are trustee. Mr. Smith then signs a warranty deed to trustee to put the property into the land trust. Then Mr. Smith does an assignment of benficial interest to you. Has Mr. Smith sold the property or is he doing estate planning??? Only the warranty deed to trustee is recorded. The Land Trust and Beneficial Interest Assignment are not recorded. So now I would think that the trustee of the SMITH FAMILY LAND TRUST could get a refinance.
I believe that some people miss why others see "hiding" as being important.
Correct me if I am wrong, but carrying title in a trust keeps the title from being listed in your name so that even if you are the beneficiary, at first glance, no one will know it. Yes, so if the attorney went to your trustee and asked who is the beneficiary, he must legally povide that info, the key thing here is a basic search won't even bring your trust up anyway so the attorney would have no reason to ask your trustee or even to think you have anything to do with that property. It would take some extra investigation that (I believe) your average attorney won't bother doing because so few really know about trusts or would think that a person would (or should) use one.
Note: This is just my take on it based on the info I have received so far. Feel free to correct me anywhere along the way...
You wrote---
Quote:"Would they(LTs) help with situations like mine?
Sure you can refinance a comml. property by showing Your Co-Beneficial Interest Ownership of the Trust Assets.
I am certain b/c I did two of these recently with the RBs(tenant buyers) I had in a Bank Bldg and MH Park.
Look for a Comml Mortgage Broker who can qualify you as the Owner for Refinance Purposes--show your Trust Agreement, Assignment of Beneficial interest and/or verified contribution to the trust and you should be fine.
Quote: Is it true that when it's time to "buy" the property, LTV would be based on appraised value??
YES
Quote: Is there any seasoning issues, if so?
one that I had...Just be sure to work with a Professional CMB who can run your refi scenario past their underwriter before you get ready to or have to actually apply.
(Preparation is the KEY!!!)
Quote: Who would be trustee and who would be beneficiary in this type of situation?"
I almost always use a 3rd Party trustee Corp. for my longterm hold deals.
Try a local title & Trust company or Bank that offer Trust services.
Yes, this is probably a stupid question (go ahead and say it), but can a land trust be set up without the use of an attorney? Derrick suggests using private companies as the trustee. I pulled a Land Trust Agreement off the net. Could they take this agreement and make it work for me without paying an attorney the thousands of dollars he would likely charge? Is this just plain stupid and such a complicated mess, that I should definitely have an attorney involved?
What a lot of investors overlook, because they are so frightened of a potential lawsuit, is:
1- If your investments are leveraged out to 80% or more, chances are no attorney wants to pursue a case to obtain your property, simply because they realize the top 20% is fluff, negottiations and commissions. If you do Sub 2s on newer properties, chances are slim you'll have over 20% equity in them., so you're pretty much judgement proof here. Attorneys only go after properties free and clear, or with fat equities that can be turned into quick cash.
2- The majority of lawsuits come from tenants. If you are lease optioning, you are a landlord and have a lot of exposure. But if you "sell" the property on a wrap with owner financing, the same thing is accomplished, however you are the BANK and have almost no exposure to lawsuits. Makes quite a difference.
Of course, your first line of defense should be a good liability policy which would avoid potential loss of your properties.
In my opinion, using a trust for asset protection is okay, but not as necessary as most investors think it is.
That's what I thought, but I just wanted to make absolutely sure. Seemed like a silly idea, but just wanted to see if others had gone this route and seen success with it.
Derrick: You're a big help and and inspiration to those of us getting started. Thanks.
RE Princess:
Nice to meet you!
Nuthin to hide here but lots of GOODIEs can be picked up, re-sold, both in part and parcel using land trust that you just wouldn't be able to legally, inexpensively nor safely do without one.
I can think of 40 or so reasons...that come to mind.
BTW---Why do you think that 'Hiding' is the only reason or benefits of using a trust? Is this just an opinion you've come by from reading posts or what?
Happy to Help!
Derrick Ali :-D
Derrick,
I talked to my attorney about these and although he would be more than willing to do them for me (and make money in the process) he does not see any really good reason to do them. He knows people that do, he has clients that he does them for. He personally does not, and he has about 8 houses, 2 30+ apt buildings and they are in his and his wife's name. Apt complexes are in his corporate name.
I have Mike Warda's Land Trust book and have almost finished it, I could see if I was a millionaire that I would want too hide all my transactions from the prying public but I would do that in other ways.
A court can ask you if you have any property, are a beneficary to any property or part of a company, LLC, S-Corp etc that has a beneficial intrest in any property and then you have 2 options, 1. Perjur yourself or 2. tell the truth and say yes.
Another thing is that any fairly smart Jo Public can pull up the property on the assessors office website, see who the company is, and then go to (in Florida) http://www.sunbiz.org and find out who the officers are in the company, this will show your name.
Now by putting a trustee as a person will hide that one aspect but now WHO do you really trust to be your trustee since he has full legal and equitable title.
So thats all I know so far.
Your comments are greatly welcomed.
If you are in a car wreck and its your fault. You ran through that traffic light (heck it was only red for a second) So the guy you hit has a little ache in his neck. He calls an atturney to take it pro-bono. Atturney does a property search and you have 2 cars in your name (normal) one house, but wait here are 16 other rental houses. He looks to the clients and shouts I"LL TAKE IT. You are a walking targer for lawsuits. Anyone thinks you are a RE investor than you have money. Now with a Landtrust all that property is hidden and he just pulled up you 2 cars. He then tells the guys in his office leave and go waste someone elses time. There you go!
Sire
When you set up the land trust, you can also have other beneficiaries at the same time, executed at the same time and keep them in a safe confidential file. You don't even need to tell them because you are just keeping it in case you need it. If you are asked if you are the beneficiary, you have another beneficiary that you can show and deliver at that time, dated way back when you set it up.
Get a new lawyer
REPrincess:
You askedQuote:Now by putting a trustee as a person will hide that one aspect but now WHO do you really trust to be your trustee since he has full legal and equitable title.
I use Equity holdings corp. or PACHoldings Corp.(a 3rd Party non-for-profit corp.)
Although a bit costly you could us a local Bank & Trust co. or Title & Trust co. that could work just as easily.
Better than an out of town relative, friend etc., even safer than an atty. (you Avoid probate as a corp is not likely to die and also not likely to swindle you all the same.)
Hope this helps!
Derrick Ali :-D
you have to trust your trustees implicitly
Derrick,
Can you explain more about the Equity holdings corp. or PACHoldings Corp?
Do I set them up or are these other corps already set up and in the business of being trustee's?
If I set them up, who are the officers? Can't be me as again I would be bene and anybody could find that out.
Thanks
Quote:
On 2004-04-14 15:50, DerrickAli wrote:
REPrincess:
You askedQuote:Now by putting a trustee as a person will hide that one aspect but now WHO do you really trust to be your trustee since he has full legal and equitable title.
I use Equity holdings corp. or PACHoldings Corp.(a 3rd Party non-for-profit corp.)
Although a bit costly you could us a local Bank & Trust co. or Title & Trust co. that could work just as easily.
Better than an out of town relative, friend etc., even safer than an atty. (you Avoid probate as a corp is not likely to die and also not likely to swindle you all the same.)
Hope this helps!
Derrick Ali :-D
i agree with jjetts4, maybe you need to get the opinion off another lawyer,
RE Princess:
Sorry about the delay...You Wrote-
Quote: Derrick,
Can you explain more about the Equity holdings corp. or PACHoldings Corp?
EHcorp is a non-profit 3RD Party Trustee Corp. based in California. Owned by a Fine Gentleman by the name of Thomas Skanden.
EHC holds title for EHTrust(tm) Deals - where there is a two-tiered Owner Carry financing scenario (involving a Seller+Investor+New Buyer aka RB)
PAC Holdings Handle one tier Trust scenarios called the PACTrust(tm) Where there is only the Seller and the Investor as beneficiaries in the trust..
Quote:Do I set them up or are these other corps already set up and in the business of being trustee's?
I use NARS to set up the Simple trust and nominate EHC or PAC to act as the 3RD Party TRUSTEE.
Quote:If I set them up, who are the officers? Can't be me as again I would be bene and anybody could find that out.
RE Princess (btw- I Like your name),
you along with all the other beneficiarie of the Trust CONTROL (read: Direct) the TRUSTEE. the Trustee can only act act the mutually agreed upon request/direction of ALL BENEFICIARIES.
To keep things simple NARS has boilerplate addendums and other components that helps everyone involved in the transaction TO GET WHAT THEY WANT UPFRONT!!!
Additionally, Bill Gatten (wner of NARS) designed the PACTrust(tm) / EHTrust(tm) TO BE FAIR & HONEST so as to Create A Win-Win-Win scenario with loads of safeguards for those "JUST-In-CASE" should things (read: MINDS) change after the trust is established!
Let me know if I can be of more help to you!
Quote:
Thanks
YOU WELCOME!
Derrick Ali :-D
Princess,
there are other reasons besides HIDING the assets.
to own in Separate trusts is still safer even if the Plaintiff knows about all of your holdings.
If I own 5 houses and someone gets hurt on premises of one of my properties then they have the right to sue the owner of the house.
If their lawyer is good and makes the connection that I am beneficial interest to that house and 4 others he may try to sue the trust of the house that "injured him" and also sue the other 4 trusts and he can sue me personally as well.
I will still have to pay a lawyer to defend me. So its still going to stink and even cost me money. The thing is, he wont win those other suits.
If it is done right the separate trusts insulate your assets against a lawsuit vs. any of the other houses.
If 123 Main St trust gets sued, you cant necessarily win the same suit against ABC Main Street Trust.
you could also accomplish the separate protection by having a separate Corp. for each house or (LLC), but setting up each one and bookkeeping may cost more in money and time.
Trusts are a little easier.
Good Luck,
N.
From an earlier post of mine ......
>>
A lot of different opinions on this topic.
I am a believer in insurance. Yes hiding your identity with LLC and Land Trust will prevent some minor lawsuits because you will be hard to find. But when the pit bull severly injures someone on your property, near your property, or across town from your porperty - you need to have insurance coverage, because they are going to find you.
Went to a Land Trust, LLC one day seminar on asset protection last week and the man started with the fact that everyone should have a liability umbrella and that was the single most important thing to have. Then you should worry about Land Trust and LLC for protection. Exactly my point. But another point is that LLC and Land Trust are difficult to to get umbrella coverage for. And if you can get it, you will need a different policy for each Land Trust and LLC. Each land trust, each LLC and you as an individual are usually treated as different entities. Last point is that if you have multiple LLCs you must keep them seperate and not comingle any money between them or with you as an individual or they will not provide you with any protection. They must be treated 100% as a valid LLC. So keep your minutes, file your forms, watch the accounting.
>>
I still use land trusts for chain of title but I do not use them for asset protection.
Brenda
Neil7 >> If it is done right the separate trusts insulate your assets against a lawsuit vs. any of the other houses.
That is incorrect. Land Trusts provide no legal liability protection.
Brenda
A land trust was suggested to me in another area of the forum. I'm not wanting to hide ownership or anything like that. The advantage I was told was that when it came time to actually purchase the property I'm wanting, it would be treated as a refinance as far as LTV was concerned, i.e. the value would be based on appraisal rather than purchase price. That would be important to me as we're hoping to lease the property for a year, make improvements over that time, and then proceed with the purchase. The land trust was suggested as an alternative vehicle. This, btw, was on a commercial property.
I still don't know that much about them tho. I've searched the forum and the "hiding" feature seems to be what everyone discusses. Even in response to this original question, I'm not reading responses of any other advantages other than privacy.
Would they help with situations like mine? Is it true that when it's time to "buy" the property, LTV would be based on appraised value?? Is there any seasoning issues, if so? Who would be trustee and who would be beneficiary in this type of situation?
Land Trusts can help with Chain of Title or Seasoning issues (they are the same thing).
If you "buy" a property by putting it into a land trust, it helps to hide the "buy" and appears to be more of an estate planning device.
Mr. Smith creates the SMITH FAMILY LAND TRUST. He is beneifciary and you are trustee. Mr. Smith then signs a warranty deed to trustee to put the property into the land trust. Then Mr. Smith does an assignment of benficial interest to you. Has Mr. Smith sold the property or is he doing estate planning??? Only the warranty deed to trustee is recorded. The Land Trust and Beneficial Interest Assignment are not recorded. So now I would think that the trustee of the SMITH FAMILY LAND TRUST could get a refinance.
Brenda
I believe that some people miss why others see "hiding" as being important.
Correct me if I am wrong, but carrying title in a trust keeps the title from being listed in your name so that even if you are the beneficiary, at first glance, no one will know it. Yes, so if the attorney went to your trustee and asked who is the beneficiary, he must legally povide that info, the key thing here is a basic search won't even bring your trust up anyway so the attorney would have no reason to ask your trustee or even to think you have anything to do with that property. It would take some extra investigation that (I believe) your average attorney won't bother doing because so few really know about trusts or would think that a person would (or should) use one.
Note: This is just my take on it based on the info I have received so far. Feel free to correct me anywhere along the way...
HRParks:
Nice to meet you!
You wrote---
Quote:"Would they(LTs) help with situations like mine?
Sure you can refinance a comml. property by showing Your Co-Beneficial Interest Ownership of the Trust Assets.
I am certain b/c I did two of these recently with the RBs(tenant buyers) I had in a Bank Bldg and MH Park.
Look for a Comml Mortgage Broker who can qualify you as the Owner for Refinance Purposes--show your Trust Agreement, Assignment of Beneficial interest and/or verified contribution to the trust and you should be fine.
Quote: Is it true that when it's time to "buy" the property, LTV would be based on appraised value??
YES
Quote: Is there any seasoning issues, if so?
one that I had...Just be sure to work with a Professional CMB who can run your refi scenario past their underwriter before you get ready to or have to actually apply.
(Preparation is the KEY!!!)
Quote: Who would be trustee and who would be beneficiary in this type of situation?"
I almost always use a 3rd Party trustee Corp. for my longterm hold deals.
Try a local title & Trust company or Bank that offer Trust services.
Hope This helps--need more then let me know!
Derrick Ali :-D
Yes, this is probably a stupid question (go ahead and say it), but can a land trust be set up without the use of an attorney? Derrick suggests using private companies as the trustee. I pulled a Land Trust Agreement off the net. Could they take this agreement and make it work for me without paying an attorney the thousands of dollars he would likely charge? Is this just plain stupid and such a complicated mess, that I should definitely have an attorney involved?
What a lot of investors overlook, because they are so frightened of a potential lawsuit, is:
1- If your investments are leveraged out to 80% or more, chances are no attorney wants to pursue a case to obtain your property, simply because they realize the top 20% is fluff, negottiations and commissions. If you do Sub 2s on newer properties, chances are slim you'll have over 20% equity in them., so you're pretty much judgement proof here. Attorneys only go after properties free and clear, or with fat equities that can be turned into quick cash.
2- The majority of lawsuits come from tenants. If you are lease optioning, you are a landlord and have a lot of exposure. But if you "sell" the property on a wrap with owner financing, the same thing is accomplished, however you are the BANK and have almost no exposure to lawsuits. Makes quite a difference.
Of course, your first line of defense should be a good liability policy which would avoid potential loss of your properties.
In my opinion, using a trust for asset protection is okay, but not as necessary as most investors think it is.
Is it just stupid (or even possible) to use a pre-made form for creating a land trust? Anyone know? Thx.
bump
HI AdamB!!!
It's been awhile since we've exchanged Q&A ---anyhow here goes...
What is your reason for wanting to use a generic doc off the Web?
Have you interview or had the doc reviewed as far as it's appropriatness for use in your state?
This investment with a competent Atty will prove WISE.
So in effect i gather you already knew this.
Seek yee good Counsel to Cover Your A$$ets!!!
Happy Investing!
Derrick Ali :-D
That's what I thought, but I just wanted to make absolutely sure. Seemed like a silly idea, but just wanted to see if others had gone this route and seen success with it.
Derrick: You're a big help and and inspiration to those of us getting started. Thanks.
AB YOU WELCOME as is EVERYONE ELSE in The TCI FAMILY Here!
Happy Investing!