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The Land Trust
is a tool used primarily to protect your
largest investment against equity predators of
all stripes. You should use these tools to
protect your property under any scenario,
whether we conclude a purchase of your home or
not. This is our free gift to you
as a public service and without charge.
There
are two primary ways to transfer ownership in
real property – 1) by a transfer of the
property’s legal and/or equitable title to an
acquiring party, or 2) by a transfer of a
beneficiary interest into a land trust, in which
the legal and equitable title is vested with a
trustee, but where you and/or your
co-beneficiaries remain 100% in charge and in
full control of the actions of the property and
the trustee, and wherein no benefits of real
property ownership are foregone or undue risk
taken.
Land trusts (often
called Illinois-type title-holding trusts) are
in-fact, recognized and valid in every state,
and are extremely safe, viable, and wholly legal
real property transfer and holding devices.
Vesting
the property’s ownership with a land trust
trustee effectively shields the property from
all types of legal actions (e.g., creditor
judgments, tax liens, divorce actions,
bankruptcy, partition, probate, income tax
liens, spousal claims, etc.).
This particular
trust structure (the Land Trust) is authorized
and/or accepted in every state either by
specific statute, specific authorization or by
the land trust’s exclusion from prohibitions
within in the local Statute of Land Uses.
It is important to know that, despite, their
relatively infrequent use, such trusts have been
in utilized for real property ownership transfer
for centuries and perfected since the beginning
of the twentieth century (promulgated first by
the precursor to Chicago Title and Trust of
Illinois in 1899, and restructured into its
present form in the early 1920’s by Chicago Land
Title).
Unlike
other inter vivos (“living”) trust
arrangements, it is not the trustee who holds
the power of direction and control: instead
it is the land trust’s beneficiaries who are its
directors and who make all decisions relative to
the property and the actions of the trustee in
dealing with the property and its title.
You remain the beneficiary under a land trust –
in full control of your assets– always.
In
view of the fact that the property’s ownership
is wholly vested in the nominated trustee,
the
beneficiaries can remain separate from virtually
any legal action that would attempt to involve
the trust property (this even includes attempted
tax lien actions by the
IRS).
A
significant additional feature of this versatile
transfer and title-holding device is the
simplicity of conveyance and conversion of
real property ownership to that of personal
property.
While the
IRS continues to
treat all beneficiaries as owners of the Realty
for income tax purposes (IRR 92-105;
The Doctrine of Equitable Conversion; Black’s
Law, 6th ed, pp 332/538), the
state treats one’s beneficiary interest as
personalty, creating excellent protection
from partition by judgment creditors, charging
orders and outside liens.
By
using a bona fide title-holding land trust and a
triple-net possessory agreement (i.e.,
full payout lease) in concert, ownership
interest in real estate can be effectively
transferred to a co-beneficiary of the land
trust without an unauthorized title transfer or
violation of a mortgage lender’s “Due-on-Sale”
admonitions relative to unauthorized title
transfer (the Due-on-Sale Clause…re. exclusions
found in FDIRA 1982; 12USC1701-j-3).
By
utilizing a land trust as the transfer device
for conveyance of real property ownership and
control,
one can easily and effectively buttresses
his/her ownership interest against virtually any
threat of lawsuit, judgment creditor claim,
IRS tax lien,
bankruptcy…including protection from legal
claims in marital dissolution, probate
proceedings, etc.
From an asset protection standpoint, one’s
holding any real estate in one’s own
name can be risky, and is considered by many
to be an open invitation to lawsuit (ergo
conversion to ownership by land trust is highly
recommended for any real property owner).
A
knowledgeable attorney or accountant would most
likely advise that all real estate ownership be
held in such a title holding trust device for
asset protection purposes.
The 3rd-party
land trust transfer referred to here allows for
simple
and convenient conveyance of ownership and
property rights, along with full income tax
benefits, to a co-beneficiary, along with
virtually the entire Bundle of Rights" in
so-called Fee-Simple or Fee Defeasible
real property ownership. (see IRC 163(h)4(d) |
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