Land Trusts are one of the most confusing and often misunderstood aspects of real estate investing.
I'm often asked about these wonderful 'things' called Land Trusts, and the techniques & benefits that are associated with them. As a land trust expert, it's an AMAZING feeling to have the knowledge & confidence to be able to use them correctly.
Listen to this Powerful Audio where Ron LeGrand interviews Lou Brown about Land Trusts:
This enlightening audio will teach you a LOT about the basics & benefits of land trusts and how they work. These are two of the most knowledgeable & experienced real estate investing teachers on the planet. Enjoy!
Speaking of benefits, let's look at a few benefits associated with land trusts and WHY it's vitally important for you to be familiar with them, shall we?
Some Benefits of Owning Property in a Land Trust:
- Will SAVE you MONEY
- Will SAVE you Time and Aggravation
- Asset Protection
- Avoids Probate
- Will MAKE You Money (Profit)
- Can Help You Save Money on Closing Costs
- Will Highly Reduce the Possibility of a Lawsuit, Creditors, and Predators
- Will Help You Sleep at Night (Peace of Mind)
- Lender can't call the loan due on sale
(When someone puts their own property into a trust)
- And Many, Many More!
The ONLY possible disadvantage of using Land Trusts is that many/most so-called "Professionals" don't quite fully understand them. This is due to the fact that they don't spend much time at all on trusts in law school, real estate classes, etc.
Most of these "professionals" (real estate attorneys, title companies, agents, brokers, etc.) are not used to doing business in these entities, and they'll attempt to steer you towards using something that's 'usual and customary,' such as an LLC.
Attorneys are notorious for doing this, probably because they get PAID to set these entities up for you, sometimes on a recurring basis!
Pro Tip: Whenever someone asks you WHY you want to use a Land Trust, just reply with this magic bullet reason:
"For ESTATE PLANNING Purposes."
That will usually shut them up. Plus it sounds cool! 🙂
When To Use a Land Trust:
Whenever you buy a house - whether it's for an investment or to live in, you'll want to buy it in a LAND TRUST. Why? Because of all the benefits listed above & what you'll hear in the audio!
Honestly, there's not a single reason I can think of on why you wouldn't want to buy in a trust. Well, actually, there is - when you're getting an institutional loan (from a bank) to buy a property, they'll want you to close on it in your own name, because you have to personally sign for the note, and that's one of the big ways they 'get' you.
But since you're not going to be going to the bank to get a loan, you don't have to worry about that, right?
The Main Parties/Entities You'll Need in Order to Form a Trust:
1. The Grantor: The person/entity putting the property in trust (Usually the seller)
2. The Grantee: The person/entity receiving the custody of the trust (Usually the Trustee)
3. The Beneficiary: The person/entity who will have the BENEFIT of owning the Trust (Usually this is YOU or one of your entities)
You'll also need to pick a NAME for your Trust. This could be anything you want it to be. One popular naming strategy is to name the trust after the address of the property, and that's fine. What you DON'T want to do is name it anything with your name in it, because one of your goals of owning a property in trust is Privacy & Anonymity!
The Trustee and the Beneficiary CANNOT be the same entity, or the trust is invalid.
The 3 Documents You Need to Form a Trust:
In Order To Create a Trust, You'll Need:
1. A DEED. This could either be a Warranty Deed to Trustee or a regular Deed (Warranty, General, or Special), just as long as that Deed names the TRUST, the TRUSTEE, and the date the trust was formed. Of course, the Legal Description needs to be a part of it.
2. A Trust Declaration. This is the document that sets the framework and names the parties, conditions, and powers of the various people/entities of the trust. Think of it as a set of instructions. It also stipulates who the beneficiary/ies is/are, what percentage of ownership he/she/they has/have, what the powers of the Trustee are, etc.
NOTE: This is a PRIVATE Document that is NOT recorded!
3. An Affidavit of Trust (Optional). This is a powerful piece of work, because it lets you show people that a trust exists, what the Trustee's powers are, and the basic/main information that the outside world needs to know - WITHOUT revealing any of the 'juicy details' of WHO owns the trust, etc!! I like to think of this like a receipt for something.
Did You Know...?
Putting real estate into a trust converts it to Personal Property?
This is different than REAL Property (aka Real Estate).
Most real estate is owned by an individual or a corporation, such as an LLC. Attorneys love that, because the owner is easily able to be found...and sued. But when a TRUST owns the real estate, the beneficiary owns that trust.
Therefore, if you want to SELL (or Assign) your beneficial rights in a trust, you can do so without anyone in the outside world knowing about it?! All you'd need to do is create and sign a simple 'Assignment of Beneficial Interest' form! Let that sink in.
Naturally, there's a bit more to it than that. And there's still a lot to learn about all the wonderful details of how to properly form and use a land trust in your real estate investing business.
We've only scratched the surface here, so I encourage you to learn all you can about Land Trusts and how to leverage them for your maximum benefit.
Don't feel bad if it takes you a little while to fully comprehend how these things (Trusts) work. As the saying goes, "If it was easy, everyone would be doing it!"
And like anything else, it's only difficult the first few times you do it.
Do You Have a Land Trust Situation or Emergency?
Need HELP Forming or Creating a Land Trust?
Whether this is for...
- Investment Deal
- Your Personal Residence
- Residence of a Loved One
I can help!
As a Certified Trust Expert, I've seen many situations where I've personally helped people to make money, save (a ton of) money, saved their a$$ by helping them KEEP a property, or just helped them sleep at night by having their property protected by the right land trust.
If this describes YOU, and you need help - or even if you're just a bit curious about a particular situation, LET'S TALK!
Just reach out to me by sending an email with the Subject Line:
"Land Trust Help" and let me know a bit about what's going on.
I'll reply and we'll go from there to see if/how I can help. Sound good?
Here, I'll even make it easy for you. Just click the button below...
I hope you've found this report/article to be informative.
Thanks for reading!
Until Next Time,