You would need to consult with a lawyer to set the trust up and ensure the best protection for your situation, and then relay that information to your tax professional. 

I hope you consulted a lawyer before adding that out clause for yourself.

The part that seems to continuously get people (unfortunately, and for lack of better words) is the "no evictions, no bankruptcy, and no more than 6 non-medical collections." 

My wife and I are considering taking on this role as a property management team, managing these properties from our current location in Washington state.Our plan is to establish a reliable network of local contacts in the area—such as maintenance professionals, agents, lawyers, etc.

At this point we are not able to find a solution except that we need to hire a lawyer which will add to the cost.

My wholesalers lawyer says he has "cloud" over the property which keeps the original seller from selling it as you stated.

I did great rehab that added a lot of value (it is what I do). one party no longer liked the deal and threatened to get a lawyer.  

Am I **** out of luck here or can I get a lawyer involved? 

You can use services like LegalZoom, ZenBusiness, or Rocket Lawyer if you want a company to handle the setup for you.

As of today, she still hasn’t made any payment and owes around $5kI have contacted a few companies that a lawyer provided me, but they all only deal with major portfolios.