What I want to do is go through the land trust and how it all comes together.
So. So what is a land trust and why would you ever consider using it?
You see a land trust is a it's a it's a document.
Okay. That's not registered with the secretary of state.
It's not registered anywhere.
It's a common law.
Trust is one way to refer to this this type of entity.
Now, some states have enacted statutes that recognize the land trust,
but by and large, most states do not.
And so we often referred to the land trust as a grantor trust.
And we do that because the person that's setting it up is a grantor.
That is, if I created a trust to grantor trust, I'm the one creating it.
I'm typically going to be the beneficiary of that trust as well.
So how does this trust come about?
What does it take to create one?
Really, it's quite simple.
All you need to do is draft a trust agreement.
And that agreement I've read Land Trust that are a page long
and I've seen Land Trust that, you know, like what we put together
that could be upwards of 30 or 40 pages in length.
But you just need to get the essential provisions
in there in order to create a document like this.
So essentially what you need is you need to have a trustee of your trust,
and that can be an individual
or can be an entity that's going to going to be the trustee.
I see that I don't have my iPad up here.
You could have an
individual or, like I said, an LLC as a trustee.
So here's an LLC.
And so the trustee is going
to be one position and then down here you're going to have the beneficiaries.
Now the beneficiaries initially
when you're setting up a land trust, are going to be the property owners.
So if I own a house and I intend to place this
into a land trust, then I would be the initial beneficiary.
And the reason why we oftentimes set up our trust with the property
owner right here as the beneficiary of the trust is because
when you deed the property into the trust, a county
may ask to see a copy of the trust agreement.
And the reason they do that
is because they want to verify that it's not going to be a taxable transfer.
So we have to turn this over.
California is a great example of that, where you
if you transfer title into a land trust,
the assessor's office will then ask us for a copy of the trust agreement.
And what they're looking for is to ensure that the beneficiary
is also
the owner of the property, that these two are the same parties.
Now, not all states do this.
But oftentimes this is how we'll go about creating the trust
just to ensure that that doesn't come about.
So anyways, you create this trust and you put it together
and you get your trustee and you got your beneficiary set up
and the terms of the trust are going to govern how those assets
are being held for the benefit of the beneficiaries.
So what are the primary reasons why individuals
like to use land trust is for privacy?
And so when you're setting up the trust in your name and the trustee, let's say
we call this the
green frog trust here.
Right.
So if I wanted to transfer property from Dave into the Green Frog Trust,
I'm going to transfer it to the trustee of the Green Frog Trust.
We're just not going to see Dave here by grants.
The following real estate to the Green Frog Trust.
It's actually going to go in to the name of the trustee.
So if you want anonymity for a land trust so that when somebody looks at title,
they're not going to see your name listed on that trust.
And of course, that's that's a benefit right there.
If somebody is looking up title, they no longer see your name.
They'll assume that you don't own it.
But where people can screw this up is they think that the trustee
is some uber magical provision inside of a trust.
Because we've heard about trusts before, where the trustee controls everything
and you want to be in control.
Well, the problem is, is that
when you're setting up the the trust or in this matter,
if your name's on there and you transfer the real estate
into your name as trustee, people are going to know it's you.
And so what we recommend is that you use a nominee trustee
as your as a trustee, which means you use a third party
or maybe even use your own limited liability company.
And so that concern that many people have about
transferring real estate into the name of a trustee.
So for example, Dave, we've set up a trust and said, Clint.
Trustee
Green Frog
Trust, for example, let's say we did something like that.
Well, if I set that type of trust up
and I sold Dave, hey, transfer the property into Clint
as trustee of the Green Frog Trust, Dave is going to assume.
Well, Clint, you're going to kick me out of the property.
You could rent the property out, collect the rent.
You can live in the property.
Well, that's not
that's not the way it
works, because when we create the trust, I won't have any control over that.
That trust agreement as its trustee.
And that's why
it gives people confidence many times when when they're setting these things up,
if they want to use a third party like myself or another attorney,
you don't longer have that concern that they're going to be able to step in
and do things for you or do things to your property, because all the powers
regarding the property itself are in the hands of the beneficiary.
So you write this up like a contract, for example,
where I was going to buy your property from you.
And I specified in the real estate purchase and sale agreement
that you needed to do X, Y and Z, right?
Well, then
in order for that deal to go through, I expect the seller to fix this and
replace a
part of the siding on the east side of the house.
Those things all are necessary. We.
We contract for those.
Well, the same thing with a land trust.
It's essentially a contract.
And when you're putting together,
the trustee is given certain powers under the trust agreement.
And whatever powers, the trustee is not given
the remaining powers, sit down here with the beneficiary.
And that's where Dave is.
So when you're setting up a land trust,
what I've explained to you is that you can use a nominee trustee.
So when title gets taken, you'll show up in the chain of title as Dave initially,
but then it'll show up as Clint Coons, trustee of this trust going forwards.
And so if somebody is looking up Dave's name,
they won't see that Dave is a current owner of this property.
And if they look at the property itself, they'll see that Clint,
as trustee of the Trust,
is the current owner. And so they think that
I am somehow the owner of this property through the trust.
But the reality is, Dave, is that owner and the reason
why people can't figure this out is because the trust document itself
is not recorded anywhere.
The trust is not set up with the secretary of State.
So you have to disclose any information. It's a private document.
The only way you know, this trust even exists is because Title
two, the property is held in that trust name.
So once that's done in, it's created.
If you're using a nominee trustee, then that nominee
trustee shall resign their position.
And when they resign again, this all happens behind the scenes.
Then Dave steps in as the new trustee.
So if you wanted to do this and you wanted to create a land trust and
deed your property into
the name of the trustee and set all this stuff up,
then you want to make sure
that when that trustee resides, if you're using a nominee trustee
that the trustee provides you what is termed a trustees deed.
This is what I've seen a lot of real estate investors get to run into problems.
They set up a land trust and they use a third party as their trustee.
The trustee resigns and appoints them.
The beneficiary, but nothing gets recorded.
All right.
Because you recorded the fact that I resigned and Dave is
now the trustee of the trust and just kind of blows all the anonymity.
There.
So what we want to do is give a trustee's deed from Clint to Dave.
And so it's an actual deed form that I would complete.
And says, Dave, now the trustee of the trust, why would I do that?
Because if Dave ever needs to refinance a property
he wants to sell the property, he's gonna have a hard time
selling property in a trust where he's not listed as a trustee.
I could eventually probably get it done,
but it's so much simpler if he has a trustee's deed in his hand
from the resigning trustee that he can take and record at any time.
So all I do is go down, record the document, and he's good to go.
His name will now appear there, so he has apparent authority over that
trust to take any action.
So that's one way the trusts are set up with DAVIES as trustee.
The other thing that people use is a limited liability company.
We've been doing a lot of this lately
where we've set up a Wyoming LLC as the trustee of the trust.
So you don't have to use myself or a third party.
You have your own LLC set up and when the LLC is set up in Wyoming,
remember, your name doesn't appear anywhere
on that Wyoming limited liability company.
New Mexico is another state that people use.
You're completely anonymous, so we just list the LLC name
now down as trustee and then you have to go through this
trustee resignation stuff that you would if you're using a nominee trustee.
So you have two options.
If you want privacy with your land trust, appoint someone that you know trust
or is a professional attorney as your initial trustee,
have them resign and then you step in as the successor trustee.
No one knows.
Or you should use a limited liability company in Wyoming or New Mexico
or some state that doesn't collect any information on you.
So if somebody looked up the Trustee LLC, your information is
not associated with it.