Posted by rayrick on April 19, 1999 at 14:42:14:
Hi Jim, I was writing my post while yours was being posted. Anyway, we’re essentially saying the same thing. I too have resigned myself to an attorney consult. Dang!
-Ray
Whoa! Chicago Title just rocked my world. - Posted by rayrick
Posted by rayrick on April 19, 1999 at 13:54:46:
I just had a very interesting chat with the head guy at the Rhode Island office of Chicago Title. He said the the type of title holding land trust I wanted to establish, one in which the trustee has no real power but is entirely beholden to the wishes of the beneficiaries, is NOT ALLOWED in RI. Now, I couldn’t pin him down on whether or not any case law actually existed on this, but he said that title insurance companies won’t insure titles conveyed in and out of this sort of trust. He said you COULD have a title holding trust, but the trustee had to be granted real powers and could not be a mere tool of the beneficiaries. he dismissed the other sort of trust as a “shell trust” or “realty trust”.
Anybody ever encountered this sort of thing in their state? Anybody out there doing land trust assignments (or PACtrusts for that matter!) in RI? Is this guy full of it?
I don’t know whether he’s got the legalities of the situation straight or not, but if the title companies won’t insure title, the legal details are probably moot, and he does represent the largest title company around.
Now, presumeably if one gets either; a) someone they have absolute trust in; or b) a great big company like Chicago Title; to be the trustee, the fact that I have to grant them real power in my trust agreement is not SO terrible, since they are extremely unlikely to abuse such power. Still, it makes me rather uncomfortable.
-Ray
Re: Whoa! Chicago Title just rocked my world. - Posted by Bert G
Posted by Bert G on April 19, 1999 at 22:27:06:
Here’s what Bronchick’s land trust course says about Rhode Island:
“No land trust statute. The law only requires that the trustee have the duty to convey title at the discretion of the beneficiary. {Read v. Power, 12 R.I. 16 (1878); Koehne v. Beattie, 36 R.I. 316 (1914)}”
BG
Re: Chicago Title has the trust paper work - Posted by rudy-austex
Posted by rudy-austex on April 19, 1999 at 20:06:27:
call the office of chicago title in chicago, Ill and ask for their land trust paprework. It’s free. they started this in the 20’s for guess who’s benefit…rudy
Re: Whoa! Chicago Title just rocked my world. - Posted by Bassman
Posted by Bassman on April 19, 1999 at 17:55:38:
Rayrick,
This may be a little off the wall but how about this .
Take the houses title in the name of your corporation , get title insurance then place the title in trust , thereby going around the concerns of the title company . Your company wont have it in their name long enough
to worry about.
Just a thought .
I may have failed to present it correctly - Posted by rayrick
Posted by rayrick on April 19, 1999 at 14:37:11:
Apparently the key here is that the trustee has to have enough real duties that the trust in not considered a “shell trust”. I think it is possible that Bronchick’s land trust agreement fulfills this requirement, without actually giving the trustee the power to do anything very meaningful without the consent of the beneficiaries. I’ll have to give his course another read.
By the way, there is no land trust statute in my state.
-Ray
Re: Whoa! Chicago Title just rocked my world. - Posted by Jim Beavens
Posted by Jim Beavens on April 19, 1999 at 14:31:36:
In Bronchick’s course on land trusts, he mentions a tiny little thing called the “Statue of Uses”, which basically says that a trustee must participate in the trust in some significant way (I’m deeply paraphrasing here without the book at hand, so this might not be exactly right).
Anyway, he talks about states that adhere to this more strictly than others (one of them being my state of Oregon), and that setting up a trust like the one we would like to use would most likely get voided in court, and all ownership interests would fall through to the beneficiary. But Bronchick made the point that the main reason to use these types of trusts is privacy, and if you find yourself in court arguing the validity of your trust, then it’s already too late; you’ve been found. So he implied that one could create such a trust as long as you were aware of the risks, and took further steps to protect yourself (such as making the beneficiary be your corporation). The fact that a title company won’t insure title that is put into such a trust is a new twist I hadn’t considered, so hopefuly some other experts will ring in. Bronchick also mentioned the possibility of getting around this problem by making yourself co-trustee after the property has been put into the trust, so you don’t show up on the county records. He didn’t really go into this very much, though, so I don’t know how commonly it’s done.
I’m sure Bill Gatten will expand upon this more, although I have to admit that he usually just ends up scaring me away from using land trusts at all if they aren’t formed with his PACTrust™. Personally I plan on finding a good attorney who is experienced with estate planning and is somewhat knowledgable on trusts in my state (I’ll let you know if I have any luck finding one, frankly I’m not too confident ;).