Posted by Bill Gatten on December 18, 1999 at 12:48:50:
Paul,
With a bona fide PACTrust-type transaction, when you go to Mr. Seller, you either have him appoint your corporation or you as trustee (though I wouldn’t do that if I were he); or you both agree on a neutral entity (preferably one that can’t die and get your property tied up in Probate, or screw you out of something). Our corporate trusteee (P.A.C.) will do it for you…their (not my company) residential property fee is $12.00 per-month if they’re not involved in set-up for collections and disbursements, and if there are no other legal services on the part of their (our mutual) law firm of collection/bill-paying service. They require only that the trust be on our forms (They will probably charge extra for a legal review of any other land trust form).
Paul, remember that we do (and advocate doing) things a little differently. For example: We always inist that the original owner’s name remain on the trust (Jack Jones grants the property to the Jack Jones Trust…conforms to Garn SG); we want the original owner to retain a beneficiary interest in the trust, which can be anything from 10% to 90%…makes no difference in your ability to take tax deductions and the other incidents of ownership and profit (which percentage the seller can forfiet at the end, and which conforms to GSG). We also want the original owner to retain 50% of the Power of Direction throughout the trust (avoids transfer taxes in most states…and he can give you a silent Power of Attorney to “vote” for him [direct the trustee] in all matters except those that would involve your dispossession for cause); we advocate (always) that you use a 3rd party, uninvolved, unbiased trustee.*
*In order to best conform in general to lender’s wishes (and not make waves), we are considering creating an extra step in the process: that of establishing the seller, himself, or the buyer, as the initial trustee (for the record), then doing a silent substitution of trustee. This is because it seems that more and more of the DOS letters and the letters authorizing transfer to a trust that we see now are trying to assert (contrary to the law re. FDIRA requirements) that the trust must be between two individuals, rather than involving a corporate entity…the jury’s still out on that one though, as there is nothing in GSG that says the trustee can’t be a corporation).
Posted by Robert McNeely on December 16, 1999 at 08:02:00:
If I put a property in a land turst with my living revocable trust (a separate entity) as the beneficiary, can I personally be the Trustee? Presently, my properties are in my living trust with me as trustee.
Re: A good Land Trust question - Posted by Bill Gatten
Posted by Bill Gatten on December 16, 1999 at 20:37:46:
If your current family trust grants the property’s tile to your new land trust, you can be the trustee or the beneficiary…or a co-beneficiary at will without affecting your existing living trust at all.
I.e., “Robert Mc Mc Neely, trustee for the Robert Mc Neely inter vivos Family Trust, dated xx/xx/xx hereby grants to Robert Mc Neely, trustee for the Robert Neely Trust [your land trust] No. XX-xxxxxx, all of the rights and title to that property situated in…”
However, Robert, beware of being any one of those trust entities in your own name if you’re not planning to assign an unrelated party as a co-beneficiary: as your anonymity will be compromised (and though your real property asset may be out of your name and “hidden,” it is definitely not shielded). We recommend that if you choose to be the trustee, you do it as a corporation (they’re harded to figure out break through; and for another thing, they don’t die and get your property tied up in Probate).
Though my trustees are always 4rd party corporations, I hold all of my co-beneficiary interests in all my land trusts in my own name (except for a few cases where I and someone else hold our respective interests in an LLC). The reason I feel very comfortable in doing so is that in each case there is an unrelated co-beneficiary party with me (usually a resident co-beneficiary who lives in the property and handles all the payments and other costs). And since our ownership is characterized as personalty and not realty…and since personalty is essentially non- partitionable by a judgement creditor…I don’t have to worry about it (EVER).
I and our attorneys back this position ('always have and always will) all the way, despite anything you might ever hear to the contrary.
If you change your living trust of xx/xx/xx date are you going to amend it and then retitle in Robert McNeely living trust of xx/xx/xx amended yy/yy/yy? If you retitled the property to a land trust the change of beneficiary from one living trust to another or an amended one would not be neccessary. If you become the trustee of your land trust you lose the anonimity that is one advantage of a land trust. If you feel you don’t need it because no one will ever sue you then you can can be your own.
Re: A good Land Trust question - Posted by Paul Macdonald
Posted by Paul Macdonald on December 18, 1999 at 08:59:22:
Bill,
I’m confused. You are suggesting that for me to be the trustee I should do it as a corporation. So I go to Mr. Seller and make the deal, he records the trust, makes me co-beneficiary, I make my corporation the trustee?
Or does Mr. Seller make my corporation the co-beneficiary and another corporation is designated as trustee?