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