Specific Examples Of A Land Trust Protection
I need to get two apt. buildings I bought recently out of my name so I'm not a lawsuit target. I try to act responsibly, but you know it can happen anyway. I have two LLCs for other property I own. Land Trusts sound good, but some posters sound a bit casual about them. I worry they haven't subjected them to actual legal scrutiny. Will a generic Land Trust filed without a lawyer actually hold up to a legal challenge, or will it be set aside? I'd like to hear specific examples either way.
I've asked four lawyers in my rural area, none have heard of them used in RE investor context and tend to recommend more insurance. Land Trusts are not even defined by statute here. That makes me anxious. Bronchick says that's good, and means no one will know how to "crack" one, but I wonder. Is this really a safe, do-it-yourself process as some have suggested?
Some otherwise savvy lawyers do act pretty stupid re trusts and their wise uses, and it sounds like that's what you've run into.
I remember, still with disbelief, how I had to educate a lawyer friend of mine, some years back, in how a benefiticary of a trust might lawfully disclaim an interest in a trust, so as to legally circumvent a "spendthrift provision" that would have kept the beneficiary from full enjoyment of the trust property.
That lawyer was a probate and will specialist in his area...but obviously had stopped learning some time before.
Today, where there used to be silence on that issue, that practice is so well known, it's statutory in a number of states.
The common law trust is as ancient and venerable as the written contract, and is in use in every state, quite lawfully.
I'm quite familiar with Bill Bronchik's material and I advise you to go with and use it, as Bill is one of the more knowledgable and understandable authors, thinkers and teachers on trusts in the USA.
I've been devouring land trust information because I see the great possible benefits of using them.
Basically the benefit of a land trust for long term holding is anonymity. If anyone from the city to the police department to your tenants that calls the trustee, the trustee is not allowed (per your trust agreement) to disclose the beneficiary, absent of a court order. Typically you'll want the trustee to pass info along that whoever was trying to get ahold of you.
Title holding trusts do not offer any direct asset protection. They do in a standpoint that when a hungry lawyer is searching for assets to decide whether you are a good person to sue, they won't find anything because your name is not in public record. However, should the trust be sued the beneficiary of the trust will be held liable. If you personally are the beneficary, you're out of luck.
Now, you talk about the issue of the land trust being set aside. If you are both the trustee and the beneficary, then the land trust is not accomplishing anything. Quite frankly the trustee and beneficiary should be separate entities.
It is important that you trust your trustee. The trustee will need to execute documents on your behalf and needs to be available and cooperative. You can, per your trust agreement, reappoint a trustee but you might as well pick a good one from the beginning.
Anyway, I could talk for hours on this but I won't. The guru's say to hold your properties in a land trust, with a corperate entity as the trustee, and your LLC as the beneficiary.
GOOD LUCK