How to Use Nominee Trustee for Land Trusts
In this episode of Coffee with Carl, attorney Carl Zoellner guides you through the process of using a nominee for your land trusts.
Hello, everyone! Welcome to another episode of Coffee with Carl. I am your host, Carl Zoellner, one of the attorneys with Anderson Business Advisors. And today, I want to talk about using a nominee trustee when using your land trust.
The first piece we should talk about is, do you or should you, or is it appropriate, to have a nominee as part of your land trust?
The reason we use a nominee trustee is if you want an extra layer of anonymity. When we use the phrase nominee, we’re talking about someone who is not you. Therefore you can remove your name from the title of that property. Normally, when I set up a land trust without a nominee, it would say Carl’s Zoellner as trustee of 123 Main Street Trust.
When I use a nominee, I can use an individual or even a business entity to be that nominee. Let’s call it 123 Main Street, LLC. That’s the nominee. And this is going to be a little confusing.
Instead of Carl Zoellner as trustee of 123 Main Street Trust, it could now be 123 Main Street, LLC as trustee of 123 Main Street Trust. The benefit is that my name is no longer there.
It becomes complicated for someone to figure out who actually owns that property. If you get sued, who do they need to take this property from to get a judgment for the plaintiff? This creates some confusion there from their legal side.
Also, it is good from the anonymity perspective, which we like for our passive investments or your “mailbox money.” For that type of protection, a nominee is a great idea, especially if you have a land trust.
When talking about whether to use an individual or a business entity in most states, you have the ability to use either. Traditionally, many of our clients were using Clint Coons, one of the founding partners of Anderson Business Advisors as their nominee trustee. There’s nothing wrong with doing that. However, you can also use either that or use an LLC you set up as that nominee trustee. And my preference would be the use of the LLC as that nominee trustee.
I like that additional level of control that I own and control the entity that’s the nominee. With Clint, it’s still simple and pretty straightforward. You have everything you need to take Clint off the title and show he’s not the owner or the trustee of that property.
It is nice to have control of the trustee entity, especially when you’re dealing with outside third parties. Often, if they need you to sign a document as trustee, they’d be trying to look to have Clint sign that document.
And then you’d have to produce what’s referred to as the trustee’s deed, which is just a new deed for the property that you would file to show that Clint is no longer the trustee and that you’re the trustee and you can sign these documents. Then you go through the whole rigmarole again if it comes up. Now, it doesn’t come up all the time.
When you control that trustee LLC, then you have signatory power on behalf of that trustee LLC. So there’s nothing you need to change. You just need to show whoever’s requesting it that you have control, say that you’re the manager of the LLC. And then, you can sign on behalf of that trust as the trustee or as the person who has control over that trustee entity.
If you’re using a land trust, a lot of times, you will want to have a nominee trustee. If you want two to three options for using that nominee trustee, you can use someone you know. That’s my least favorable option because people will pass away, disappear, or move away. It becomes inconvenient.
In case something does happen, you have something in your hands that says, “I’m now the trustee.” Your option would be to use–if you’re working with Anderson–Clint Coons as your nominee trustee, which is another good option. And we provide that documentation to facilitate that transfer if, for some reason, you need it.
My preference would be the LLC that is going to serve as the trustee of that land trust. There’s no compensation generated to that trustee. It’s just a name that goes on a title. And I liked that option because you hold the strings to everything. You can sign on behalf of trustee LLC as manager of that trustee LLC. It makes life a little bit easier, and it gives you additional control so that it’s easier to work with outside third parties.
As always, keep taking advantage of our free educational opportunities and the free content we put out on the web. So that’s Toby’s Tax Tuesday, our tax and AP events for our clients who’ve already gone through our Tax and Asset Protection event.
Our Structure Implementation Series is fantastic. That answers a lot of the questions you have in the beginning. So there are a lot of different educational opportunities out there. One of my favorites as well is our Infinity Investing Workshop.
Resources mentioned in this video:
- Join our next Tax & Asset Protection event to learn more advanced tax minimization & entity structuring strategies
- Subscribe to our YouTube channel to make sure you never miss the latest strategies & updates
- Check Out Toby’s Video where he mentions PLLC on your business card
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