Realty411 Magazine The Future of Real Estate is Here | Page 71

Land Trusts vs. Limited Liability Companies R ecently I read an article by an attorney telling his readers not to use a Land Trust. He recom- mended titling your investment prop- erty in a Limited Liability Company. His reasoning was that Land Trusts are only a “deterrent” to a lawsuit and they do not provide “true” asset pro- tection. The attorney went on explain- ing how any lawyer “worth his salt” would find out you are the beneficia- ry of a Land Trust as the result of a judgment debtor’s exam (which is a hearing in a court room…sometimes called a Citation to Discover Assets). The attorney writing this article con- cluded that you have “zero” privacy with a Land Trust and if you want pri- vacy you should “save the expense” of a Land Trust and title your investment real estate directly into an LLC (Ne- vada or Delaware). After over 40 years in the real es- tate investment business, I can spot an attorney who understands the law but does not have practical real world ex- perience. I agree that LLC’s have bet- ter asset protection than a Land Trust, but Land Trusts have far better privacy elements than LLC’s. I use LLC’s in my business but NOT to hold title to investment property. Let’s review the benefits of using a Land Trust. • Can have an LLC, Corporation or Personal Property Trust as its beneficiary Experienced real estate investors under- stand that putting all of your properties into any one entity (be it an LLC, Corporation or a Land Trust) is a nexus for a lawsuit. Re- member grandma’s advice to not put all your eggs in one basket? It makes logical sense to put each property into its own separate Land Trust and then make the beneficiary of the trust your LLC or Corporation. This yields the best of both worlds from a privacy and asset protection standpoint. Since the Land Trust Agreement is not re- corded anywhere no one can find out who the true owner of the trust is without a full blown lawsuit…which is expensive for your adversary. Furthermore, if the property is in one state, the Land Trust is formed in another state, and the LLC beneficiary is registered in a third state you get a dy-no-mite structure that is not only difficult to unravel but legally expensive to pursue. Most contingency fee lawyers would give up and start looking for another sucker to pursue. Real estate investors are more suscepti- ble to a lawsuit than most other Americans. Land Trusts: • Do not require a registered agent • Pay no franchise taxes FREE Land Trust Webinar at: wwwLandTrustWebinar.com • Cost nothing to form (you can form them yourself) or For more information, call Randy Hughes at: • File no tax returns • Require no tax ID number Randy Hughes 866-696-7347 Mr. Land Trust 40 Years Experience • Can be formed in a state other than where the property is located (for terrific privacy and asset protection) For Information, Visit Online: LandTrustsMadeSimple.com • Can easily hold each property sep- arately from other properties to keep all investments insulated To receive a FREE copy of my booklet “50 Reasons to Use a Land Trust” send me an email at: [email protected] Learn from THE National Expert on how to use Land Trusts for Pri- vacy, Profits & Asset Protection • Are NOT registered anywhere on the planet Realty411Guide.com The general public’s perception of a real estate investor is that they do not have any debt on their property, have lots of cash in the bank and tons of positive cash flow. So, even if the investor is upside down on their property debt and suffers month- ly negative cash flow they are still at the mercy of the contingency fee lawyer and his/her dead-beat client. Keeping proper- ty isolated in separate Land Trusts makes logical practical sense to those of us in the trenches every day. A huge benefit to holding title to each property in a sepa- rate trust is the ability to finance without affecting the other properties. You can also sell property on an install- ment contract basis without affecting other properties. If you title multiple properties in one LLC the lender will want to tie up all the assets of the LLC as collateral for the loan on just one property. Take your advice from a streetwise investor with de- cades of real-life experience. Use a Land Trust to hold title to your investment real estate…you will be glad you did! PAGE 71 • 2014 reWEALTHmag.com By Randy Hughes aka Mr. Land Trust