Effectiveness of Land Trust in Texas for anonymity

Tax, SDIRAs & Cost Segregation
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Effectiveness of Land Trust in Texas for anonymity

NA NA
Member since 2020 · 11 posts · 6 votes

There is no shortage of content on the benefits of a Land Trust but I am curious as to whether there is truly an anonymity shield created by using one, especially in TX. 

I ask because it seems like a majority of investors will purchase property in their own names and then transfer title to a Land Trust. Wouldnt the initial recording of title in the individuals name be a dead giveaway that the individual is in the chain of title and most likely owns the property? Additionally, it is quite easy to lookup an address on the appraisal districts website followed by a lookup an the TX county clerk website and one could put the data from both together to infer the chain of title. 

So I am finding it hard to understand how an investor who manages their own properties can enjoy the benefits of anonymity using a Land Trust. Maybe I am missing something obvious but I wanted to post my concern to get some opinions.

Thanks.

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Lance LvovskyPro Member
Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
6y
Originally posted by @NA NA:

There is no shortage of content on the benefits of a Land Trust but I am curious as to whether there is truly an anonymity shield created by using one, especially in TX. 

I ask because it seems like a majority of investors will purchase property in their own names and then transfer title to a Land Trust. Wouldnt the initial recording of title in the individuals name be a dead giveaway that the individual is in the chain of title and most likely owns the property? Additionally, it is quite easy to lookup an address on the appraisal districts website followed by a lookup an the TX county clerk website and one could put the data from both together to infer the chain of title. 

So I am finding it hard to understand how an investor who manages their own properties can enjoy the benefits of anonymity using a Land Trust. Maybe I am missing something obvious but I wanted to post my concern to get some opinions.

Thanks.

I will give you a real example based on a client. Client has a Land Trust that owns a condo in Colorado. It is a CO Trust too. Purchased the real estate in name of Land Trust. The Trustee is an LLC. With the LLC Trustee, the client's name does not show up on the deed to the property.

From a tax perspective, the Land Trust can be drafted such that all income gets reported on the individual income tax return (Form 1040). One must consider whether the LLC itself has to file, but that is another conversation, and one you should have with your tax advisor.

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  • Guifre Mora
    Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
    6y
    Originally posted by @NA NA:

    There is no shortage of content on the benefits of a Land Trust but I am curious as to whether there is truly an anonymity shield created by using one, especially in TX. 

    I ask because it seems like a majority of investors will purchase property in their own names and then transfer title to a Land Trust. Wouldnt the initial recording of title in the individuals name be a dead giveaway that the individual is in the chain of title and most likely owns the property? Additionally, it is quite easy to lookup an address on the appraisal districts website followed by a lookup an the TX county clerk website and one could put the data from both together to infer the chain of title. 

    So I am finding it hard to understand how an investor who manages their own properties can enjoy the benefits of anonymity using a Land Trust. Maybe I am missing something obvious but I wanted to post my concern to get some opinions.

    Thanks.



    https://www.lonestarlandlaw.com/Anonymity.html

    Check this great Article 

    1Reply
  • Carl FischerPro Member
    Rental Property Investor · Ambler, PA · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    @NA NA

    If you don’t do the trust paperwork properly it won’t provide the anonymity. Trusts do work in many states and I have used it in Tx.  However, You can’t be stupid about it.   You can make it work if you buy the real estate in your name with a few more steps— but best to buy RE in the name of the trust. Bankers, insurance companies, utility companies, tax returns, eviction process, code enforcement, litigation all can create problems if not addressed properly. There are classes and forms that help you get through the wickets. I think it is good for asset protection. Some people get proud of their accomplishments and say “I will meet you at my building” after they go through the steps to put it into a trust- can't fix stupid.

    If you don't follow the proper procedures with your LLC it's corporate veil can be easily pierced and the legal protection can be eliminated. Follow the rules and if your not sure get a smart attorney to help you.

    [email protected]215-283-2868
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  • Lance LvovskyPro Member
    Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
    6y
    Originally posted by @NA NA:

    There is no shortage of content on the benefits of a Land Trust but I am curious as to whether there is truly an anonymity shield created by using one, especially in TX. 

    I ask because it seems like a majority of investors will purchase property in their own names and then transfer title to a Land Trust. Wouldnt the initial recording of title in the individuals name be a dead giveaway that the individual is in the chain of title and most likely owns the property? Additionally, it is quite easy to lookup an address on the appraisal districts website followed by a lookup an the TX county clerk website and one could put the data from both together to infer the chain of title. 

    So I am finding it hard to understand how an investor who manages their own properties can enjoy the benefits of anonymity using a Land Trust. Maybe I am missing something obvious but I wanted to post my concern to get some opinions.

    Thanks.

    I will give you a real example based on a client. Client has a Land Trust that owns a condo in Colorado. It is a CO Trust too. Purchased the real estate in name of Land Trust. The Trustee is an LLC. With the LLC Trustee, the client's name does not show up on the deed to the property.

    From a tax perspective, the Land Trust can be drafted such that all income gets reported on the individual income tax return (Form 1040). One must consider whether the LLC itself has to file, but that is another conversation, and one you should have with your tax advisor.

    1Reply
  • NA NA
    OP
    Member since 2020 · 11 posts · 6 votes
    6y

    Thanks for the tips @Carl Fischer and @Lance Lvovsky.

    @Guifre Mora the article you referenced is very informative.

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