Management Companies And Land Trusts
I am reading old posts on land trusts. I keep seeing BillGatten saysomething like the following:
Landlording (managment) cannot be turned over to a paid entity. Doing so would constitute characterization as a homeowners association, and be taxed corporately (failing the trust).
Question: What if the management company is made a secondary beneficiary. I know this can be done with lending where the first beneficiary is the lender and the second beneficiary is you (or your corp). The trust agreement then specifies who has what control.
So, if it can be done it that instance, what if I make myself the primary beneficiary and the management company the secondary beneficiary. The trust would then outline who has what control. Will this setup "fail the trust"?
I have no idea what the problem is. I was quoting someone else. He went on further to say this:
there should never be a paid property manager (creates a HOA); the beneficiaries must manage the property to avoid characterization as a business trust, corporation, partnership or equitable mortgage; any “landlord” must be the beneficiaries, although they can confer the title of landlord to any (unpaid) third party service that is given the responsible of rent collections and disbursement without charge.