STRATEGY
TRUSTS
Benefits of Land Trusts
SEPARATING FACT FROM FICTION ON THIS CENTURIES-OLD TOOL
by Clint Coons
nfortunately for real estate investors, separating fact from fiction when it comes to land trusts can be
In situations where privacy is desired, consider the following scenario:
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difficult. A land trust is a simple tool that has been around since King Henry VIII ruled England. Its purpose then, to hide ownership of land (so a commoner would not have to serve in the military or lose the benefits of his land upon death), is the same today. There are several benefits to land trusts, the main one being privacy.
1 Investor establishes a land trust with his attorney or Wyoming LLC as the trustee and the investor as the beneficiary; 2 Investor funds the land trust with sufficient cash for the purchase of the property; 3 Trustee enters into purchase and sale agreement with the seller on behalf of the trust; 4 Title is taken in the name of the trust care of the Trustee; e.g., North Investments, LLC a Wyoming limited liability company, Trustee of the 1456 Trust Dated October 1, 2020; 5 After closing, investor transfers beneficial interest in his trust to a different LLC; 6 If using an attorney as the trustee, it is important to get a resignation and appoint yourself as successor trustee; and 7 If using an attorney, don’t forget to pay him and send him a nice bottle of wine for all of his hard work (I prefer pinot noir from Willamette Valley.)
PRIVACY A land trust confers anonymity for the investor, but only in the following situations:
• Title is taken in the name of the trust; • Someone other than the beneficia - ry is named as a trustee; and
• The beneficiary is not a party to the mortgage. The last two points are the most important because real property can always be transferred into a land trust to remove an investor’s name from the chain of title, but if his name appears as a trustee or he is listed on the mort- gage, privacy is lost—or at a minimum—compromised.
70 | think realty magazine :: september 2021
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