How do I create a Land Trust in the state of California. I believe there is no registration for it and I will need to assign a Trustee and place my SCorp as the beneficiary? Is there a standard document for this? Or can you just write it up yourself? Does it need to be notarized? Thanks for the help!
You can create it yourself, but if you are not familiar with it you might want to find an attorney to do it. I have used land trust for over 1000 times, but I am not at liberty to give it out.
Land Trust does not need to be and can not be registered in California.
If it is an irrevocable trust, you can even get an EIN number from IRS for it...pretty cool!
Yes you can put your SCorp as Beneficiary even as a trustee of it.
There is no standard document other than the one you or an attorney creates it for putting or naming or listing the beneficiaries.
Land trust does not need to be notarized.
Land trust takes the Mastery of Real Estate to the next level...I call it PHD. You be surprised what can be accomplished through Land Trust. Definitely worth digging into it.
I am going to give you a final advise .... if you really want to know it works...when you purchase a property give a copy of it to the title company who is insuring your title and let the Title officer advise you, as to the structure or the ability of the land trust to transfer or sell the property in the future, so you know the Land Trust is valid or is up to code according to the title companies standard...This was a good and free advise, buy yourself an Starbucks coffee with it.
Best wishes and God bless,
most people assume the trustee and beneficiary are the same. I jeep them different just in case of legal problems, the trustee can not answer questions about the beneficiary.
wow thank you Morry and Jeremy! That was the exact information I was looking for! I really appreciate your help! Morry, not only will I get a Starbucks Coffee, but I will have a nice piece of Real Estate too! Thank you!
You ask an excellent question that is too complex to answer in a forum.
I am not an attorney, & this is not legal advice. You are correct in that in California, Trusts are not registered like corporations or LLC's etc.
Here are some good resources to further educate you on Trusts for Real Estate purposes.
Mark Warda : Land trusts for Privacy & Profit (check Amazon)
Bill Bronchick: He is an attorney in Colorado, & Real Estate Educator. He has lots of general information on his website also sells material for Land Trusts.
Ward Hanigan: He is a real estate investor & non-practicing attorney in San Diego. He teaches California specific Trust applications complete with a Resource Guide with sample trusts. I believe he has a corporation that also offers trustee services.
If my trust acquires a property in California, the Grant Deed is notarized & recorded showing the name of the trust as the Grantee.
Depending upon what the purpose is for using a trust in the first place will determine which legal language should be considered to be utilized.
Best of luck
Morry Eghbal do you suggest a revocable or irrevocable trust when purchasing property?
Thank you Ellis! I've heard of Ward Hannigan, but the other two I'm not familiar but they all sound great! Definitely will check them out!
Btw I moved from Westlake Village just one year ago! I miss living there!
Contract Business Trusts can be created for any purpose and is contract based not statute based. Only limited to the lawful purpose you create and not limited or regulated like what the legislators created. Works great.
From what I've seen most people assume Land Trusts, in themselves, will provide them asset protection but, from my understanding, they really just provide an added layer of anonymity. Mainly so someone doing public records searchs will not see your name associated with your properties and make you a target for frivolous lawsuits, and such.
This is exactly my understanding of so called land trusts in California. They provide anonymity but no other real benefit. I often hear people talk about the innumerable sophisticated techniques and advantages of being an expert with land trusts, but no one can list them out. The only other use I have seen deals with the ability to transfer beneficial ownership rights in the land by assigning the beneficial interest in the land trust but i don't understand how that is better than using a business entity. Can anyone else explain the additional benefits? @Morry Eghbal ? @Ellis San Jose ?
It would be impossible to list every possible use for a trust, but they have been & still are an extremely useful tool for me to put together numerous deals. There are pro's and con's for trusts & corporate structures (LLC, LLP, Inc. etc)
Structuring simple joint ventures
Transaction flexibility & creativity: (subject-to, option to purchase, dividing, segregating, transferring, creating, acquiring beneficial interests.
Typically lower formation & maintenance costs vs. Corp. entity.
Possible tax advantages if used appropriately.
As always, consult with an attorney & tax professional to determine when the use of a trust or corporate entity is more appropriate for your situation.
THIS IS NOT LEGAL ADVICE. YOU ARE NOT MY CLIENT WITHOUT HAVING A SIGNED REPRESENTATION AGREEMENT.
If you check out my BP blog I wrote an article about how you might use the Trust instruments in place of or in conjunction with an LLC. I'm also going to be interviewed by Brandon for an upcoming BP podcast that will cover this subject.
I draft custom made trust agreements for my clients, and I recommend that you hire an attorney that is familiar with the statutes that regulate trust creation in your state. If they don't have to redraft the language, and only have to replace names in the document, you can likely get out of their office without too much bleeding.
A key point about irrevocable trusts is that you no longer own the property, the trust owns the property. Apart from anonymity, this is a significant barrier for someone attempting to foreclose on it with a judgment.
I'm admitted to practice in Texas and New York, so I can't speak to California specifics. Under Texas law, the trust will fail if the beneficiary is also the trustee under the doctrine of merger. Also, to have a business organization be a trustee, often times states require special certification.
If you have someone you can trust (or an attorney friend), that is usually the cheapest/quickest way to resolve the trustee issue.
If you liked this post, please follow check out my BP blog.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing