trustee corporation
i was told that for a corporation to act as a trustee, special verbiage needed to be in the articles of incorporation. is this true??
i was also told that the best way to hold real estate (i know this is usually a personal preference) is to own inside a land trust, with a trustee corp as the trustee and an llc as beneficiary. is this true??
gotmike:
Seems like a lot of entities to do the job that can be done with one (i.e., the LLC). Nevertheless, since you asked about the trust ... generally most state laws do not prevent a corporation from serving as a trustee, nor do most state laws impose restrictions unless the corporation is a bank or financial institution. However, the corporation will be subject to general state fiduciary law and state trust law.
Using 3 different entities will mean that you will have to comply with your state's corporate law (for the corporation), LLC law (for the beneficiary of the trust), and trust law for the trustee relationship of the corporation to the beneficiary relationship.
On top of that, you generally will get no greater asset protection from the landtrust than you will from an LLC. Privacy? If you use an attorney to file your articles of organization (which is generally the only document of an LLC that is publicly disclosed) as the organizer, your name will not appear on the public record.
Taxjunkie
i agree, it seems like a lot of rigamarole... however, i'm not doing it just for myself, it is for a group of six of us, so i don't know if that matters.
i am in florida, do you know if that is one of the states that requires special verbiage??
I understand that sometimes you may want to use a land trust while transfering property.
Besides that, is there any advantages to using a land trust rather than an LLC to hold property?
Florida is one of the few states that actually has a Land Trust Statute on the books -- others will accept it by precedent/case law, but Florida has its own statute: 689.071 (not sure *what* exactly this refers to...)
This law *specifically allows* the trustee to be a corporation or other entity.
Utah has no Land Trust Statute of its own, so I don't know if using a corporation as trustee would be acceptable. I assume so, but you'd have to consult a lawyer.
A great general book on Land Trusts is "Land Trusts for Privacy and Profit" by Mark Warda. You can get it online at Amazon or Half.com -- it's only about $25.
One reason for putting a property in a trust as opposed to an LLC is to "firewall" your properties from one another. A claim against one property could not attach all the assets of the corporation/LLC. Unless, of course, the trust is ruled invalid, which can happen.
Another reason is for Privacy -- if your corporation/LLC shows up on the records as owner of 10 properties, a lawyer will think that you have a lot of assets, and are therefore a good target for a lawsuit. If your corporation/LLC owns nothing, because all of the properties are in trust, you aren't a good target for a lawsuit.
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[ Edited by shfg on Date 04/16/2003 ]