Today I want to answer a few questions from a newsletter subscriber about how land trusts can help you maintain privacy and protect your assets. Important for real estate investing and even if you only own your own house. So let’s get right to it…
First, land trusts keep your name off public records. Why is this important to a real estate investor? The short answer is it helps keep your assets out of harms way.
Let’s say you have 10 properties and a tenant slips, falls, hurts themselves and then sues. Who do they sue? The owner of the property and if you, your LLC or your corporation own all 10 properties then all 10 can be attached in a judgment. In short, you have risked all of your properties and their equities because they have the same owner.
But when you use a land trust for each property then each has a different owner with only one property is at risk when the tenant sues. The best part is when you have the right land trust you can create them as needed at no cost and the only person that keeps the land trust on file is you (that’s real privacy). There are no requirements to register the land trust with the state or to give anyone a copy.
Some states like Arizona require disclosure of the beneficiary when you take title in a land trust so an additional step is needed to maintain privacy. What to do? Simple, create another land trust to be the beneficiary of the first and you’ve met the state requirements for disclosure. Plus the only person that knows who the beneficiary in on the 2nd land trust is you and your trustee.
Caution! I see a lot of people screw up land trusts by making themselves the trustee or the beneficiary. If you’ve done this you blew it. I’ve even seen the self inflicted double lobotomy when people have been both the trustee and beneficiary at the same time!
Using land trusts can be easy and if you want more information be sure to check out http://www.land-trust-seminar.com/.
Now go buy a house!
Gerald Romine
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