Real Estate Investment

The Power of Real Estate Trusts and Right of Assignment

There are many good reasons why property owners would not want to have their name on title. The moment you someone knows that you are a Real Estate Investor you automatically become a target for being sued. Whether it involves your personal residence or an investment property, it is always a wise idea to keep your name off title. The way you can go about it is by setting up what is called a Real Estate Trust. The Trust actually becomes the owner of the property “not you.” Anytime someone asks you if you are the owner of the property, you can legally respond with a “no.” Even if you were asked the following under oath: “Do you have an ownership interest in the house?” You could respond by saying “no I do not.” Have you told a lie? Absolutely not! Most attorneys would not know enough to ask the next question which is… “Do you have a beneficial interest under a land trust that owns any real estate?” The whole reason for setting up a trust is to keep the ownership of the property private. Whenever you set up a trust, you’ll need someone to act as trustee. The trustee is the person who is in the public eye and handles all financial matters on the property (paying taxes, etc.), you will be the beneficiary of the trust which means that you will receive all the benefits of the trust (depreciation, cash flow, etc.). Who can the trustee be? The selection of a trustee for you land trust is an important decision. A trustee should be someone you can trust with your financial affairs. The trustee can also be terminated by the beneficiary. Banks, attorneys, trust companies and accountants, as well as friends or family members can all be trustees. The beneficiary can be an individual, multiple individuals, a living trust, or a business entity. Sometimes using another trust or a business entity as trustee for a land trust is a wise idea because of the multi-tiered protection it creates. Land trusts are not difficult to set up, but many attorneys have limited experience in dealing with them. If this type of ownership appeals to you, it may be in your best interest to do a little research. Some attorneys that handle land trusts have some websites you may want to check out: www.legalwiz.com., www.LouisBrown.com., and www.legalees.com. I have found these websites handy when it comes down to acquiring a land trust that is going to work for you, or further information.

As a real estate investor you also always want to include the words and/or assigns after your name. You would just simply put those words after any and all real estate contracts that you sign in the future. Using those words gives you the right to “assign” or “transfer” the property over to someone else. If you want to transfer your property directly into a trust and save yourself a step in the process, you can do so by simply including those words. This can really create “ease of transfer” for properties that you may want to sell wholesale or retail. In fact one of the greatest benefits of using land trusts to hold real estate is the ability to easily transfer you interest. Documents which transfer an interest in real estate must be sworn before a notary public before they can be recorded in the public records. In some states, at least two people must witness the signature. Some states ( Florida in particular), may charge an “intangible” tax on the transfer of such interests. Check you state, county and /or local taxing authority before making such a transfer.

Depending on your situation, setting up a land trust for your properties, may be a great way to go without having to invite the government to know about your business. A land trust provides privacy and, to some extent, asset protection. A land trust will also help you avoid troublesome real estate laws.

Editor