How does a land trust fit into my
overall structure for operating and conducting my real estate activities?
By JJ Childers
In surveying
the list of questions submitted through the Investor Wealth Ask Campaign,
I noticed a number of questions regarding the role of the land trust
in the overall real estate operating structure. For those of you who
have been following the answers that have been posted so far, you may
have noticed the absence of the land trust in our treatment of operating
entities for real estate activities. That leads us to this week's topic
of how the land trust fits into the overall scenario.
As you
will recall, we've gone over the fact that we must always, always, always
focus on the three key areas of:
1. Asset
Protection
2. Estate Planning, and
3. Tax Reduction
Let's begin
our discussion of land trusts by pointing out that the land trust, in
and of itself, gives us essentially no asset protection, no estate planning,
and no tax reduction. When faced with this information it makes us wonder
if the land trust has any sort of role in the structuring of our real
estate operations whatsoever. The answer is an emphatic YES!
For some
of you reviewing this information right now, this seems a little confusing.
First of all, if you've been around real estate for any appreciable
length of time in an investing capacity you've undoubtedly heard about
land trusts. The fact is, you may have heard of the land trust being
referred to as the quintessential ingredient in any real estate asset
protection plan. As I've mentioned, the land trust alone will not give
us the protection that we need. But how can we say this while at the
same time stating that we would certainly want the land trust included
as part of our overall plan? The answer to this question ties back in
to our previous discussions as to which entity is the best.
I'm sure
you will remember that in our earlier answers, we dealt with the fact
that there is no single entity that will provide us with the best protection
available. What we are looking for is an overall structure to help us
to accomplish our primary objectives of wealth creation, accumulation,
and preservation. In order to a achieve this, we must implement a structure
of various entities working one with another to provide us an iron-clad
asset security system. The land trust is a key component of that system.
Specifically,
the land trust works exceptionally well at providing us with privacy.
The reason for this is that the trust need not be registered anywhere
that is a matter of public record. This enables us to hold title to
real estate in the name of an entity that is not registered with the
state. One of the benefits of this trust is that it gives us a base
level of anonymity that can deter many potential predators to simply
leave us alone. Because of this, however, far too many real estate investors
rely on this approach alone and fail to implement the necessary additions
to ensure maximum protection.
When structuring
a land trust, it is always best to name another type of entity that
can give you limited liability as the beneficiary of the trust. I prefer
to use the limited liability company (LLC) in this capacity. By structuring
the transaction in this manner, we now have anonymity through the land
trust as well as limited liability through the LLC. This gives us a
much more solid plan for safe-guarding our real estate assets.
Over the
next couple of months, we will be taking a closer look at the individual
entities to see where each fits in the overall entity structuring process.
As we do so, you will gain a better understanding and insight into how
the entities work one with another. This is the most crucial element
in effectively operating your real estate operations safely. For this
reason, we stay quite busy throughout the year educating real estate
operatives through our Wealth Structuring Institute asset protection
boot camps. If you would like information on how you could attend one
of these boot camps or simply how our legal team can assist you in putting
together your real estate asset security system, contact us at info@secretmillionaire.com.
We would love to work with you to help implement an entity structure.
ACTION STEP
Over the
course of the next few weeks and/or months, we'll be delving into the
specifics of each type of legal entity more fully. Until then, review
your particular entity structure (or lack thereof) and think about how
you are going to take care of the important concerns of asset protection,
estate planning, and tax reduction. Real estate investing and/or development
can be a phenomenal way of creating wealth, but it does you no good
whatsoever if you end up losing it all by a lack of proper planning.
Remember, people don't plan to fail, they fail to plan!
About JJ Childers
JJ Childers
is a licensed attorney and active real estate investor and developer.
As an attorney,
he deals primarily with the areas of asset protection, estate planning,
and tax reduction. Simply put, he assists people with overcoming the
obstacles of lawsuits, income taxes, and death taxes. He travels the
country extensively sharing his strategies with other real estate investors
as well those involved in various types of small businesses. Through
his innovative and dynamic strategies, he has literally helped thousands
of people save millions of dollars in taxes.
Even better,
he has the knowledge and experience to apply these strategies to real
estate investors in particular. He teaches these strategies to help
real estate investors build in more profits to their real estate deals
and to properly protect those profits. The unique combination of being
both an attorney and real estate investor make him a hot commodity with
real estate investors throughout the country.
