Forgot something . . . - Posted by Brad Crouch
Posted by Brad Crouch on July 21, 2003 at 18:01:16:
I remembered something a couple of hours after I made the previous post. In an effort to get your question answered as completely as possible, I am pasting in one of my old posts:
Advantages to using Land Trusts
Posted by Brad Crouch on February 25, 2003 at 13:13:23:
I came across this list from a Florida lawyer and thought it might be of interest. Permission to re-print has been granted.
Advantages of Land Trusts
So many people have asked us why they would want to use a land trust that we have made this special page listing all the advantages of land trusts.
By using a land trust no one knows you own a property. No one knows how much a person has in the bank or what stocks or bonds you own; why should all your real property be public record? There is no public record of
the properties you own in land trusts.
This means creditors, ex-spouses, tax authorities, lawyers and others do not know you own the property and will be less likely to be able seize it.
Keep purchase price secret
By using a land trust you can keep your purchase price of the property secret.
Keep sale price secret
By using a land trust you can keep your sale price of the property secret.
Keep change of ownership private
When you sell a property in a land trust, you can sell the beneficial interest of the trust, rather than conveying by deed. This way no one knows the property has been sold.
Lower property taxes
Many property tax offices raise assessments when a property is sold. Since a sale of the property can be kept secret and even when deeded the sales price can be kept secret, these cannot be used by the tax offices to raise taxes.
Liens, judgments and other claims against you or your partners are not liens against the property. This means you can buy and sell properties, even if you have judgments or liens against you.
When you die you can have your trust property instantly go to whomever you name in your land trust. No probate, no delay, no lawyers.
Lawyers are eager to sue people who own lots of property. If it doesn’t look like you own much property it is less likely someone will sue you. Or if they do sue you there is a better chance they will accept settlement with your insurance company than go after property they don’t know you own.
Ease of control
When you have several partners owning a property, a land trust can allow you to manage it more easily.
Ease of management
When you are dealing with tenants, you can position yourself as merely an agent of the trust. This allows you to sympathize with their problems while insisting that they comply with the lease.
Ease of negotiation
When buying or selling property for a land trust you can set strict rules for the trust and then present yourself to the buyer or seller as the good guy, wanting to make the deal, but limited by the trust.
Improved financial statement
When you have mortgages in your own name the amount of debt goes on your financial statement and if you have a high debt ratio you may look like a bad credit risk. When a property is in trust the mortgage can be in the
name of the trust alone and you can list only your equity on your financial statement.
Saving on title insurance
If you sell the beneficial interest in a land trust, rather than deed the property, you do not need to get new title insurance.
Ease of transferability of interests
With a land trust you can transfer fractional interests in a property with a quick signature, rather than needing a notarized deed.
Simplification of making gifts
Interests in land trusts can be made as gifts to family members to take advantage of the gift tax exclusions.
By having a land trust sign notes and mortgages you can limit your liability for a default judgment if there ever is a foreclosure.
When a property is in a land trust a disgruntled partner or heir of a partner can’t force the property to be sold.
Ease of foreclosure
When you sell the beneficial interest it is possible to take it back more easily then if you sold the land and took back a mortgage.
Unlike a regular lease/option where a tenant can get a vested right to the property, a lease option through a land trust can be structured to keep the option from vesting until the tenant has built up substantial equity.
Avoiding personal problems of beneficiaries
When an investment is structured in a land trust you don’t have to worry about the spouse of a divorcing partner changing the deal.
Avoiding real estate brokerage laws
Since a beneficial interest in a land trust is personal property, you could perform brokerage services for it without violating the real estate brokerage laws.
Holding judges property
Judges are allowed to own interests in land trusts without violating ethical rules.
These are just quick summaries of the benefits. They are explained in more detail in the books, Land Trusts in Florida and Land Trusts for Privacy & Profit.