Land Trusts with LLCs??????

[N/A N/A]

Just got done reading Wealth Protection Secrets by William Bronchick. The book came highly recommended by REI. Anyway, in the book the author recommends using a Land Trust in conjunction with a LLC. In essence the LLC becomes the beneficiary of the Trust(s). So each rental property besides being in a LLC will be titled to a seperate "trustee". Has anyone ever used Land Trusts in conjuction with LLCs????????

Thanks!!!

[Andy J.]

I use land trusts with my LLC for all of our subject-to purchases. I've read through Bill's courses and utilize parts. For sub-to, it's not necessarily for asset protection, but from DOS clause protection (to a degree, that's a whole 'nother story). The land trust is recorded as the owner of record. The Trustee has the power to sign on behalf of the trust, much like a manager usually does for an LLC.

A Land Trust isn't meant to be the 'end all be all' of asset protection, it simply adds another layer. The idea is that should someone wish to pursue a frivolous lawsuit, upon examination a lawyer will be easily able to find the beneficiary to sue and will then ask for a $5,000 retainer to keep working. Most people with a frivolous lawsuit will look for an easier target than bringing $5k out of pocket. Again, this is Bill's pitch, the reality of it is up for argument.

It's highly unlikely you'll get financing through a Trust, it can be done but there's a lot of extra work involved and with banking regulations these days I wouldn't get your hopes up. Insurance isn't a problem, just add the trustee and beneficiaries as additional insured on top of the land trust (remember, the trust is actually the owner).

When you sell the property you actually have a couple options. Number one you can appoint a new trustee (someone close to you or perhaps yourself) and sign the sales docs. Or you can assign your beneficial interest in the trust to someone else (similar to assigning ownership interest of a company). The advantage of assigning your interest in a trust is that it is considered personal property and not real estate. Even though the only thing the trust owns may be a house, the actual beneficial interest in the trust which owns the house is just personal property. This might save you on transfer taxes, title insurance, etc.... Depends on your state.

Word of caution, if you don't use a closing company or title agent that has experience with this you're going to want to bring a backpack full of reading material, snacks, and water..........it's going to take them a while to figure out what your're doing and how to get it done.