The must-have asset protection tool for any real estate investor.
Form a Land Trust With Anderson
In most U.S. counties, anyone with a computer can access recently recorded deeds and with this information they can learn more about your financials then you want them to know. A land trust is a type of grantor trust which can provide privacy and lender protection for real estate investors. When used in conjunction with an LLC, a land trust can also provide immeasurable asset protection.
Besides the obvious protection and privacy benefits of a land trust, real estate investors also avoid the threat of violating their due-on-sale clause in their mortgage. This clause, which is a part of most mortgages, gives lenders the option to demand full payment of a loan balance when the ownership of the financed property is transferred without the lender’s prior consent.
As a real estate investor with existing mortgages on properties, you still have the ability to transfer the ownership into your LLC without violating this clause. This is another way a land trust comes into play; as an inter-vivos trust, they are protected under the Garn St. Germain Act. Congress put this act in place, and it creates exceptions – protections from lenders – when the lender cannot exercise its option to pursue a due-on-sale clause.
Experience You Can Trust
Anderson Advisors, under the leadership of real estate investor and expert Clint Coons, has set a precedent for the use of land trusts to provide privacy and protection for real estate investors. Anderson further perfected this by using land trusts in conjunction with LLCs to provide unparalleled asset protection for real estate investors large and small.
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What You Can Expect When Forming a Land Trust With Anderson
A land trust is similar to a living trust, but specially drafted to achieve the desired results. There is still a grantor, trustee, and a beneficiary, and these positions still have the same general roles and meaning. Once you and your advisor have determined who will fill each role, your land trust is drafted and sent to you for execution.
Your completed trust will contain all of the appropriate and required legal documents, including the assignment paperwork from your land trust to your LLC, providing the asset protection. In most states, we can also deed the property into your land trust for you.
While it seems like there are just a few simple steps to take, land trusts deal with sensitive information and processes. It is important that an attorney forms your trust, and you execute it to ensure you receive all the benefits and privacy from this tool. Schedule an appointment with an advisor today to discuss whether this is the best option for you.
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Anderson Advisors FAQ
What is a Land Trust ?
A land trust is a real property title-holding vehicle, a trust agreement under which the beneficiary directs the trustee in all matters affecting title to the trust property. The beneficiary also holds the trustee free from liability. The trustee usually prepares the deeds and assignments of beneficial interests, whereas the managing beneficiary usually prepares the leases, loan documents and instruments, and other papers for trustee review and signature. In all cases, the beneficiary remains liable for trust property operations.
How did Land Trusts come about?
Land trusts have been around at least since Roman times, but their clearest history is from the time of King Henry VIII in England. At that time, people used land trusts to hide their ownership of land so they would not have to serve in the military or fulfill other obligations of land ownership. For example, an elder uncle would hold his nephew’s land so he would not have to join the king’s army. To end this, King Henry in 1536 passed the Statute of Uses. The statute declared that if one party held land “for the use of” or in trust for another (“beneficiary”), then legal title was vested in the beneficiary. Obviously, if the statute had been given literal effect, there would be no trust law. Shortly after the statute was enacted, however, English courts declared that the statute only applied if the trust was passive, that is, the trustee didn’t do anything but hold the land
What are the benefits of the Land Trust?
Uses and Benefits of the Land Trust
The uses and benefits of the land trust are varied. With a land trust, an individual or individuals can
- Have privacy of ownership and nonresident ownership.
- Avoid probate.
- Limit exposure to judgments and liens
- Avoid marital interest in title.
- Insulate from the hazards of individual ownership.
- Transfer beneficial interest.
- Use beneficial interests as collateral.
- Prevent separation of the land.
- Protect in the acquisition, development, and operation of apartment developments, condominium apartments, or cooperatives.
- Facilitate estate planning.
- Provide partnership, corporation, and agricultural land-use protection.
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