LLC And Land Trust?
I just met with an attorney today here in Duluth, GA. He recommended NOT using a Land Trust but to simply form a seperate LLC for each house I purchase. He also said to be careful with the Operating Agreement. He wants $750 to complete one for me that's solid. Does anyone have one they can share with me? What do you think of the idea of using seperate LLCs and no trusts?
Thanks for your help!
dfund
HURRY UP AND RUN
and interview at least four (4) other legal beagles!!!
This one sounds kind of focused on the TIGHT $750. LLC set up fee YIKES!
That is overpriced and most attorneys will steer you away from land trusts as there is little for them to maintain every year, unlike an LLC. Mark Warda, Bill Bronchick, Ron Legrand and Lou Brown have lots of info on land trusts out there.
GL
dfund:
First off I think the Duluth Attorney's recommendation for seperate LLC's over LandTrusts was based on ASSET PROTECTION. Having a seperate LLC for every property you own limits the exposure of an occurance to just that property. It also protects your personal assets from your investment properties.
A Land Trust is useful for not triggering a due on sale clause with your mortgage company and protecting your privacy.
I think $750.00 for a Georgia LLC is a bit expensive, I charge $500.00. I also think having a seperate LLC for each property might be overkill, but I said might because you can never know what may happen.
hope that helpz
As an attorney that does draft a lot of LLCs for RE clients, I would say that the cost depends on the particular LLC being setup. I have setup a few LLCs where $750 barely covered my costs after getting a proper Operating Agreement in place. It also depends on the expenses absorbed by the attorney. I would say on average that having a qualified attorney doing an LLC setup for this price is very reasonable. Granted, you can always go for the cheap online "do it yourself" version or use an inexperienced attroney. Also, I very seldom, if ever, recommend a land trust. It seems to be the latest buzz being pushed by real estate "get rich" types. Those are just my thoughts.
ljeffery10,
This is an area I know very litte about but am about to need to start working on.
Exactly why would you not recommend a Land Trust?
Thank You,
JohnCl
Aside from possible tax disadvantages, while a trust is generally a flexible device, it may be a more complex than many landowners wish to use or need. LLC's ofter much greater flexibility and tax advantages, not to mention you can still avail yourself of a IRS 1031 tax deferred exchange while holding RE in a LLC. Also with a trust, a landowner no longer has the beneficial interest in the land.
Why doesn't a landowner have beneficial interest in a land trust? If you want a person as the benificiary, you can do this, I must be misunderstanding you.
The dos clause says that at no time shall the title be held by and entity. This would clearly trigger the dos clause since even a single person LLC is still considered an entity........
TRATT
Quote:
On 2004-09-28 18:10, ljeffery101 wrote:
to further comment on Razzio's post; single member LLCs are the sole member, or owner and as such, this will not technically trigger a due on sale clause either, although this has yet to be tested in court as far as I know. However, if the lender wants to get dirty and call due the loan, cure is easy enough to avoid playing their game.
One other thing, consinderation of a seperate LLC for each holding depends on the assests value and the risk exposure you are comforable with. I have drafted seperate LLCs for each property, and also drafted an LLC to hold 2, 3 or more properties. It all depends on the value of the assets you wish to put at risk.
<font size=-1>[ Edited by ljeffery101 on Date 09/28/2004 ]</font>
$750.00 to set up an LLC is outrageous. An LLC is not a Trust, FLP, or a Corporation which can be somewhat more involved. Most LLC statutes were expressively written to allow for an individual to set it up. This “attorney” is making the LLC operating agreement seem like some esoteric document whose validity hinges on every word. Many states don’t even require an LLC operating agreement to be filed with the state, but kept as an internal company document (i.e., never part of the public record, can be drawn up anytime after the initial LLC filing). Far more important is how the LLC is actually run, i.e., no co-mingling of funds, separate bank accounts, EIN numbers, business license, etc.
As with all revocable trusts, a land trust offers zero asset protection beyond anonymity. A land trust is ignored for creditor purposes just as it is for tax purposes. All assets are treated as owned by the settler. If there is a judgment against you, the creditor is entitled to seize any assets that you have in the trust. LLCs and FLPs offer true asset protection. Genuine asset protection does not rely on anonymity.
(P.S. It can also be difficult to refinance property in a land trust because the trustees are usually banks who will refuse to execute the necessary documents. Also, as mentioned, the beneficiary of a land trust cannot utilize 1031 exchanges.)
Hi Everybody,
I read the post on Land Trusts
and L L C's The more I read the more confussed I www.became.Could one or all
of you put all posts together and explain
in lay terms good bad and ugly about
L/Trust's and llc's.I'm not a lawer but
would like to know what all of you were
www.saying.Thank You(And have a great day). :-?
i personally found this book to be quite good on land trusts:
http://www.cashflowinstitute.com/landtrust
also, check out Bill Gatten's stuff at www.landtrust.net
or this article on REI Club:
http://www.****This URL Not allowed****.com/articles/choosing-an-attorney
happy investing
AllCash