Land Trusts - I want to start using them for privacy

13 Replies

Right now, everything I own is out there for the world to see in my name.  Going forward, I want to see about cloaking my ownership by putting everything I own now and will buy in the future into a land trust so that tax records will reflect some trust owns the property, not me.  Regarding the mailing address that will be listed on the tax assessor site, I will simply use the attorney's address that will handle all this for me so that I am fairly well hidden.

Does this work or sound logical?   Anyone else do it?  

I am also thinking about having seperate trusts....either one for each part of town that holds a few properties or maybe going so far as having a trust for each property simply named as the address.....ie 123 Main St Trust.    Same questions....logical?  Anyone else doing it?   Issues?

Again, the main goal is privacy. Asset protection is down the road with each landtrust benefitting an LLC, my attorney is recommending series llc's.

I don't want to own things in my llc directly for a variety of reasons at this point.

Please provide any insight or feedback on my concept for this land trust and please let me know if you do it differently.

Thanks

I can't speak to Oklahoma, but trusts in TX don't grant liability protection to the Settlor. It may be that Oklahoma has a domestic asset protection trust statute, but those typically require a professional trustee and other requirements. 

In TX, I would recommend that a trust owns a series LLC, and then the series LLC would then own the land. The LLC provides a liability firewall, and the trust provides some anonymity.

(I am a lawyer licensed in TX, but not your lawyer. http://lawjrm.com)

@James Miller  A lawyer who says something and  I so  I like your disclaimer clear and to the point.... a lawyer ........, but not your  lawyer.

what is exactly the purpose of a trust  they really can't find out who owns the trust?

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In TX, if the trust owns the LLC 100% and manages the LLC, then only the LLC's name shows up in the public records. I.e. if you had "ABC Real Estate, LLC", you'd form a "ABC Real Estate Management Trust" to own and manage it. In TX, trusts don't register anywhere, so all the public records would show is "ABC Real Estate Management Trust" as the owner of the LLC.

In practice, they work well for individual owners as well as spouses, but the trust gets unwieldy with even more owners.

(I am a lawyer licensed in TX, but not your lawyer. http://lawjrm.com)

I'm wondering why privacy is such an issue? If you want privacy put your address as a PO Box. I would think that asset protection should be the number 1 reason behind not holding a property in your name and making LLC's and Trusts.

As stated, I am not interested in trusts for any form of asset protection. I have an LLC for my property management side which I currrenly run everything through. I basically treat myself as an investor and manage my properties for free, plus a few other properties I manage for others for a monthly fee.

Rather than let anyone go to the Assessors site and see that I own X number of properties...currently 11 going on 250, I would rather they look up a property there and wherever else this information is abailable and just see some random trust name....line 123 Main St Trust.  Why would I want to show the world that I have significant real estate holdings, even if it is in the name of my llc?

Listing a PO box and showing my name or my LLC name still does not afford me the privacy I want. I am not worried about someone walking up to my front door, although I don't really want that either. I simply don't want to paint any form of a target on my back because I own real estate. If land records were not public, it would be less of an issue.

Does anyone else mess with this?   Am I being paranoid in worrying about this?

By using a trust, I can bypass due on sale clauses with mortgages, still have access to better, cheaper, consumer type insurance products etc. The minute I put my properties in the name of the LLC, I can no longer get my cheap AAA insurance and instead have to get a more expensive, lower coverage commercial policy. Additionally, my lenders MAY accelerate the note since it is no longer in my name or a land trust as allowed by law.

Thanks for the input.

If someone wants your information, they will get your information. Especially in a law suit. A land trust will not protect you in that regard. It will only protect you against the most basic of transactions. Seek out qualified local counsel if you want more information. Also Trusts don't allow you to completely ignore Due on Sale clauses. That only works in very specific jurisdictions and under very limited scenarios. That particular protection has been blown out of proportion.

@Chris Simmons I hold several properties in individual land trust.  You need to confirm that it is ok with your mortgage holder in order to transfer them into a trust.  The ones I hold are through a private lender who understands the use of land trust and all my 'sub2' deals are held this way.  I do encourage the use of them as it is an easy way to hide who the actual owner is and extremely easy to transfer beneficiary interest as well. 

Have you picked up an umbrella policy to give yourself added protection? I've done a fair amount of reading on this topic and it seems opinions are all over the place on the LLC topic just like everything else, but seems like most agree an umbrella policy is a good start to protecting yourself if you for some reason do become a target. I got an extra mil of coverage for about $270/ yr, and of course you can go higher depending on your assets.

Also, I'm not sure about your area, but as far as far as I'm aware you cannot search an LLC on an accessors site and see all the properties the LLC owns.

In TX you for sure can search an LLC name on an assessor's site (at least in Tarrant, and Dallas counties), and see all they own.

In TX (I'm only licensed in TX), the better strategy is Trust owns LLC that then owns the land if you want both anonymity and asset protection.

(I'm a lawyer licensed in TX; but, I'm not your lawyer. http://lawjrm.com)

@james 

@James Miller If I purchase a property in the name of the Land Trust and the beneficiary of the Land Trust is an LLC does that not offer the same asset protection then doing it in reverse as you stated previously?

Not in TX. Your state may be different. 

An LLC being the beneficiary of the land trust does not change ownership out of the trust. Since the trust is the legal owner, the trustee of the trust is exposed, particularly to premises liability exposure. Trusts also don't have the great charging order protections that Texas LLCs have. So no.

What you're describing is a (poor) attempt to get around a due on sale clause. 

A trust should own the LLC and the LLC should own the land if you're wanting both asset protection and relative anonymity. (At least in TX).

(I'm a lawyer licensed in TX but I'm not your lawyer. Http://lawjrm.com)

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