Trust-LLC vs Nothing

[Brandy Phillip]

My Husband and I went to speak to an attorney today to ask about establishing a Land Trust. We have heard so much about setting up a Land Trust to not only provide protection for our assets but also be able to move our existing homes under the LLC without triggering the "due sale clause".

The attorney recommended doing nothing but increasing our insurance. He said that even having a LLC was a waste of money. So we are open to recommendation on what is the best approach to protecting our personal assets, moving our properties to be owned by our LLC, and protecting our properties.

We currently have two properties (deeded to us), closing on two properties (the LLC was established this year so we don't have a long credit history), we are going to purchase an additional property before the end of the year as well. We have a business account opened under the LLC's name.

Please advise with specifics so we can make an informed decision.

Phillip Crew 

[Chris Mason]

Hi @Brandy Phillip,

The LLC hype is in no small part driven by folks that generate fees by helping people establish LLCs, just like my industry hyped up perpetual cash out refinances in 2004-2007 (minus the bubble). Always consider the source. In your case, your lawyer effectively turned down legal fees by telling you not to do it, which I would say strengthens his credibility, and would want to make me consider referring him to others.

You mention the 'due on sale' clause, implying that much of your portfolio is in traditional residential financing. A revocable living trust can get a Fannie Loan at closing & without any sneakiness, and generally nothing stops Brandy Phillip from calling his trust the "Screw You My Name Is A Secret Trust" instead of the "Phillip Family Trust," providing some degree of anonymity (you can just google who owns an LLC, most of the time...). And you can stack a good umbrella insurance policy on top of that. And you can do all this, while still getting to keep your low cost Fannie 30YF money. Those are facts, not legal opinions, which I am not in any way qualified to offer.