Posted by Bill Gatten on April 26, 2000 at 20:23:07:
IDEALLY (for virtually perfect protection) you’d have a third-party unrelated corporation as a trustee…either a trust company or a non-profit trustee corporation. And your beneficiry interest would best be held in a limited Parntership with you as a 10% general partner (your wife, kids, and that brother-in-law someone mentioned would make great limited partners). Now you’re virtually “bullet proof.”
For the sake of expense, an LLC may be easier to set up and will “probably” provide about the same degree of protection against creditors. I’m told the simplest is a Delaware LLC–only requires one particpant (may be true in Nevada too), and most companies that set them up will charge you about $100.00, plus filing fees for the whole enchilada.
Ok Pro’s, here’s the question:
I want to purchase a property in a land trust. Should I put my s-corp as beneficiary and myself as trustee or vice versa? I asked Ron Legrand this last year at a workshop but forgot what he told me. Anyone know the answer?
Thanks for all the responses. You all seem to suggest a third party as trustee, but who? I need someone who’s not going to disappear in six months to Alaska, someone who’s not related to me or the transaction. I had a problem selling my first rehabb project (I let someone else control the sale… Learned that lesson the hard way) ever since then I have a difficult time not controlling every aspect of the business. Any suggestions? By the way this site is a life saver!
Bert,
Won’t it be a problem having my brother in-law from Phoenix as the trustee what if I need to sell or transfer ownership in a hurry, how will he sign docs? I don’t want it known that I have beneficial interest but at the same time I still want to keep control.
If you are the beneficiary, doesn’t that mean that you are the owner? I thought we were supposed to hold properties in a corporation (or LLC) to limit liability, get improved tax benefits, etc.
Help me understand this.
Thx.
Ron
According to the people who write about these things, transferring property thats in a land trust is simple as can be. You just sign a “Transfer of Beneficial Interest”, naming the new owner as beneficiary. The trust now belongs to him, and he then directs the trustee to deed the property back to him. (Or if he’s smart, he’ll leave the trust in place and name a trustee of his own choosing).
And as BL says, FedEx is how long-distance business is done all the time.
Posted by B.L.Renfrow on April 27, 2000 at 09:00:44:
…is how they sign documents!
Your agreement with the trustee (Bronchick’s stuff is excellent) specifies that the trustee acts at your direction.
You could also use as trustee a local attorney ($) or a bank trust department ($$$) but you will pay for it. The peace of mind might make the cost worthwhile, however.
One of the uses of the land trust is privacy. If you have your corporation as trustee it may not show you on public records but the attorney will likely check that you own or are an officer in a corp. The preferred method is to have a 3rd party as trustee.
In this case the S corp is likely already in existance and can be used to passively flow the income to the individual if it were beneficiary. You are right that the preferred approach is to have an LLC(not as a corp) the beneficiary.