Land trust meeting - Posted by Tim Jensen

Posted by Tim Jensen on February 24, 2001 at 07:43:24:

Terry,

We see out CPA next Tuesday.

Tim

Land trust meeting - Posted by Tim Jensen

Posted by Tim Jensen on February 23, 2001 at 20:08:49:

Hi all,

I just met with my attorney for 2.5 hours regarding trust and a couple other things. I am looking for some asset protection. We concluded that I will sell some of my properties to two corps. Then those two corps will put the properties into trust with me being the trustee. Also, when I sell the properties to the corp, I am going to place a demand mortgage on the properties from the corp to me. They will be interest only payments.

My attorney informed me that the demand mortgage will help to pull money out of the corp if the corp gets sued. IE- if corporation gets sued then you just call the mortage due. Also, it will make the corp look like it has little assets. Now, I was just going to place the property into a corp, however I have lower income stuff and there are spirts where I have to kick people out. If I left them in the corp soley, I would have to pay an attorney each time I needed to do an eviction. My attorney explained that if I was the trustee that I did not need an attorney to represent me in court. The trustee being the owner can represnt themselves in court.

THat is just a brief overview of our visit.

Now onto my question, do you think it would be better to use a LLC or a regular corp?

Thanks,

Tim

Re: Land trust meeting - Posted by Bud Branstetter

Posted by Bud Branstetter on February 24, 2001 at 21:49:06:

Maybe you could explain why he wants you to use two corporations.

The limited liability entities are usually better at holding assets. The proceeds would flow to the individual and the corpus be exempt from forced sale. The usual scenario is to have that demand mortgage owned by the out-of-state LLC rather in your own name.

Now if he meant that the corporation be co-beneficiaries of the trust I could agree. But I would ask why corp’s versus LLC’s. C corps are used less for real estate holding because of the double taxation issue. Maybe he meant S corps to pass the cash flow to you passively.

Re: Land trust meeting - Posted by Terry (Houston)

Posted by Terry (Houston) on February 23, 2001 at 20:26:04:

Some have said that a LLC is great for holding properties and a corp is great for flipping. S or C would be up to you and your situation.

Just a thought is to get a CPA involved for the sales as there will be tax implecations all around.

Terry

Let me answer you - Posted by Tim Jensen

Posted by Tim Jensen on February 24, 2001 at 22:53:53:

Bud,

He was talking about an S-corp. The reason we decided on two corps is so that if somehow they corp gets sued. I only lose half the properties instead of them all.

Then again, why bother. I could just use the demand mortgages to make the one corp. worthless. So after some thought. I think one corp owns them all with demand mortgages on all the properties.

Tim