Why I Avoid Using an LLC As a Land Trust ' s Trustee
Mr. Land Trust
Many of my students have asked me the question: " Can I use my LLC as the Trustee of my Land Trust?" While it might seem convenient, in my view it creates more problems than it solves, Worse, it can be a fatal flaw in your Land Trust.
Here are a few reasons I avoid using an LLC as a Land Trust Trustee.
Privacy Vanishes: The Public LLC Problem
One of the primary benefits of a Land Trust is anonymity. You shield yourself from frivolous lawsuits and unwanted attention by keeping your name out of public records.
That veil of secrecy is torn away if your LLC is registered in a state that publicly discloses member information and serves as the Trustee. Anyone can search the state ' s business records and discover your connection to the property, defeating the purpose of the Land Trust. This is especially true in states with transparent LLC registries.
The SelfÂDealing Dilemma: Contractual Limitations
In most jurisdictions, you cannot legally contract with yourself. This is because the legal concept of a contract requires two distinct parties. When your
LLC, which is solely owned and controlled by you, acts as the Trustee, and you are the sole member of your LLC Beneficiary or the sole individual Beneficiary, you essentially create a situation where you ' re contracting with yourself. This can lead to legal complications and challenges to the validity of your Land Trust. This obstacle creates a situation where the authority of the Trustee can be called into question.
Operating Agreement Exposure: Authority Challenges
At some point, your Trustee will likely need to demonstrate their authority to sign documents, whether for a sale, refinancing, or other transaction. If your LLC is the
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