Updated about 5 years ago on . Most recent reply
Land Trust
do land trust exist in the state NJ as well as all states?
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For @Vivian Benn's original question: yes. Most states without the legal structures in place defer to the Illinois Land Trust statutes to determine validity and case law. Apart from Louisiana, you can hold land in trust in any of the other 49 states and the District of Columbia. This has to be done in accordance with the law of any of the foregoing states given that the beneficiary, trustee, or the property is based there.
In regards to Land Trusts in general, they don't actually offer any liability protection. They are just an additional tool, and when used correctly offer many benefits and reinforce a persons asset protection strategy. Benefits include:
1. Avoid the Due on Sale Clause to transfer property and get liability protection. Because the Land Trust is an Inter Vivos Trust (estate planning tool) and excluded from the Due on Sale Clause thanks to the St Germain Act, these transfers do not trigger the same red flags for lenders. So the strategy is simply to purchase a property, transfer it into a Land Trust and finally assign the LLC as the beneficiary.
2. Best financing options. You can take the loan out in your personal name, then after the purchase transfer the property into the Land Trust and assign the LLC as the beneficiary. You get liability protection through the LLC and the great financing options available in your personal name.
3. Privacy through anonymity on public record. When you set up a and Trust you can have your attorney sign the document as a "nominee trustee" for you upon formation, but then have yourself become the trustee after formation. When people look at who owns the property they will see your attorney's name and the document itself is protected by attorney-client privilege. Anyone trying to start a lawsuit will need to pay up early in discovery simply to try and tie you to the property - a pretty strong deterrent to law suits.
4. Estate Planning. Because the Land Trust is an estate planning tool it will actually make this process much easier when the time comes. If you do have all your assets held in Land Trusts already, it's an optimal structure that will integrate into your estate plan for minimal costs.
I personally like Land Trusts a lot. They are very inexpensive compared the to benefits they offer and reinforce investor's asset protection strategies significantly.