Land Trust Any reason to use?

Question

Its seems to me that the main benifit of using a simple land trust to hold title to your properties is that it will hide the owners anme form public record. This is nice, but it seems pointless for mortgaged properties, as the mortgage note is recorded in the true owners/borrower's name.

Aside from situations where property is owned without mortgage, can anyone tell me what benifit would be gained by using trust to hold title?

Account Closed · Answer

I agree with the estate comments offered by Joe. I disagree with the mortgage details offered.

The trust reduces the profile of the investor when people search for assets. Normally this is done by checking a name against the owners for property. Hence the fact that the mortgage is there in the person's name might not be detected.

If asked under oath what you owe you still have to answer.

True liability protection comes from having the title in different legal entities (1 or more properties per entity depending on the value & strategy).

A trust has a narrow purpose and many pro-trust folks overstate the impact.

Bronchick has a great book on the topic called Wealth Protection. It is close to $14 when ordered on Amazon.

John Corey

Joe Wilson · Answer

1 reason is to have the property out of your estate for estate tax purposes.  A trust (provided it is not a grantor trust in this case) can hold the property and you can designate it to pay a certain amount to income beneficiaries over the years until they die and then at that time the property will be passed on to the remainder beneficiaries (hiers).  You do not receive a bump up in basis when it is passed on to the next generation, but it does not go thru probate or the estate and you avoid the high estate tax if you are already up to the $2MM exemption limit.

The mortgage should still be in the name of the LLC or trust, but the bank would have a guarantee on file.  At least with my experience with my LLC.

Joe