REI Wealth Monthly Issue 02 | Page 15

ERRONEOUS LAND TRUST ADVICE – HOW TO SPOT IT CLINT COONS 3. Similarity “Attorneys are averse to venturing into uncharted waters for fear of liability.” of Parties Result Application of the Merger Doctrine in –A trust will automatically terminate when the same person serves or becomes both the sole trustee and the sole beneficiary of a trust. The trust is ignored and the law views the beneficiary as the owner of the property regardless of how title is held. referred to as “Statute of Uses”. This common law doctrine will defeat most attempts to create a land These problems can be avoided with proper drafting of your land trust: trust unless careful consideration is given to certain principles when drafting your trust document. Three common errors are as follows: 1. Create an Active Trust – Give the trustee of your land trust some duties over the assets 1. Dry Trust is Created – If a land trust is not trustee has no or limited powers should only properly funded with real estate the trust will not hold any assets. Thus, the trust becomes null and void and will not be recognized. 2. Limited Trustee Duties Create a Passive Trust of the trust. An Illinois style trust, wherein the – A trustee must be given active duties to be used in Illinois. The trustee of your land trust should have the power to collect rents, contract for repairs, pay taxes, and pay for expenses. 2. Use More Than One Individual – A single perform with respect to the trust assets investor should never create a land trust otherwise the trust will fail. States such as wherein he holds both the beneficiary and Illinois, have a F?FVB??BG'W7B7FGWFW2v?F???G'W7FVR?6?F????6??v?R??fW7F?"6??V?@??F?R7V6?f?2W'?6RF??V??g?F?R( ?7FGWFR?`???v?2???BF??&B'G?F?6W'fR2F?P??W6W>( ????F?W6R7FFW2?G'W7FVR6?&P?????F??G'W7FVR?gFW"F?RG'W7B?2gV?FVB?@?????FVBf?"F?F?R???F??rW'?6W2?????F?R&V?Vf?6????FW&W7B?276?v?VBF???FV@??v?F??WB???vW"?fW"F?RG'W7B76WG2??????&??G?6?????F?RF??&B'G?G'W7FVP???vW'2&R&W6W'fVBF?F?R&V?Vf?6?&?W2?6??V?B&W6?v??W??&W6?v?F???F?R??fW7F? ???F??2?2v????7BGF?&?W?2vWB?Bw&??rv?V?v???&V6??RF?RG'W7FVR??b?'&?VB6?W?R?0??F?67W76??rF?RW6R?b??BG'W7G2?F?W???7&VF??r??BG'W7B???R7?W6Rv???6W'fR0????6?'&V7F?77V?RF??2?2F?RG?R?bG'W7B??P??F?RG'W7FVR?B&?F?6?&R&V?Vf?6?&?W2?&R7&VF??r??