- Hi, Clint Coons here with Anderson Business Advisors.
And in this segment, we're going to discuss
purchasing real estate with a land trust.
Now, for those of you
that aren't familiar with land trust,
there's two different ways you can set it up.
You can set it up with yourself as the trustee,
or you can use what is referred to as a nominee trustee.
That is someone who will serve in your place
for the purposes of maybe deeding property
into the name of the trust
or actually buying property in the name of the trust.
And the whole concept here
is that you don't want your name to be on title.
So if somebody was looking,
they wouldn't associate you back to the property.
That means essentially what we're doing
is looking for anonymity.
Now, although anonymity is your friend,
when it comes to an aggressive attorney,
it can also be a potential problem for you
when you're trying to purchase property
in the name of a trust.
Because when you go to buy a property
in the name of a trust, a land trust,
and you're using a nominee trustee,
the title companies typically require
that the trustee is the one
that signs off on all of the documentation.
Now, I know inside of a land trust,
if you watch my other videos,
that the beneficiary are the ones
that have all the control over the land trust.
So technically speaking, it is the beneficiary
who should be signing off on the trust,
but it's not the way it works.
You know, I've done countless deals with land trusts.
In fact, watch my other video on selling property
with a land trust and I'll recount you
a story that I currently have on a property
I just sold in Hawaii.
But the fact of the matter is
is that when you're trying to buy property
in a land trust and you have this nominee trustee on there,
the title company is not going to read your trust.
They just make an assumption.
And this is really one of the benefits of the land trust
is that everyone assumes that it's a living trust
or some other type of trust,
and they don't quite get what it is
that they're working with.
So they're going to require the trustee to sign off.
Therefore herein lies the problem.
If you're using a nominee trustee,
and I've done this before for my clients,
in order for this to work
then it is the trustee who has to sign off
on all the paperwork.
So what I've done before,
and, you know, mobile notaries actually come
out to my office sent out by the title company
and I sat down and signed all of the documentation
on behalf of the trust.
If you're using debt it's probably not going to happen,
because most trustees will refuse
to sign off on any debt, of course.
I know I've been in that position before
and they've asked that of me.
So if you're considering
purchasing property with a land trust,
then you yourself should be the trustee.
Now, here's another option, what you could do.
And keep in mind there's an asterisk here.
You could set up your trust,
so when you set up the trust
and you're going to choose who a trustee is,
what you could do is you set up your land trust here.
Maybe instead of naming yourself
as an individual as a trustee
you choose an entity that you own and control,
like a limited liability company.
So my trustee over here
will be an LLC that I've set up.
Preferably this would be one that has anonymity.
Maybe it's a Wyoming limited liability company, Nevada.
Well, I show and use Nevada because in Nevada
to obtain anonymity you have to have a nominee there.
So I'd do it with a newly formed Wyoming
or possibly Delaware limited liability company
to run this strategy.
So the LLC is set up as the trustee of your trust.
The beneficiary, bene, is you.
So if you've set up this LLC
and you're the manager of the limited liability company,
what's going to happen when you go to signing then,
you as the manager
will sign on behalf of the LLC,
which is the trustee of the land trust.
So now title will actually be taken
in the name of this land trust right here.
And on title, if the name of your LLC,
let's say it was Big Profits, so title would be as follows:
Big Profits LLC
Trustee
of 1632 Land Trust,
dated, and of course, whatever date it was
that you set this up.
So that's how the title would be taken.
And so what occurs now
is that your name's not actually listed there.
It's the LLC that will be listed as the trustee.
And that way you're in complete control
of the entire transaction.
You don't have to use an Omni trustee like myself.
Now, what's the asterisk?
What's that little caveat?
Well, technically speaking,
and again, it's not going to matter
because again, title companies,
they miss this stuff all the time.
In order to be a trustee, you have to be,
I mean for a company to be a trustee,
it has to be licensed.
Now, your company, of course, is not licensed
and you're not going to go through that process.
So at the end of the day who's going to report you?
Well, you're not going to report yourself,
so I don't really see that as being a problem.
But it is a way,
I mean it is a potential issue you have to be aware of
that at a later date someone could raise the issue.
Let's say your trust is gettin' sued,
and they bring up the fact,
oh, you set up an entity
that's not even licensed and registered.
You don't follow the laws of your state.
I mean, it just a garbage argument
that an attorney may use to try to discredit you.
But it would allow you to complete this transaction.
I have clients that have done this
routinely with their land trust investing,
and I've seen it work firsthand.
So just keep that in mind.
If you want to buy property
in the name of a land trust and you want anonymity,
given the fact that it's going to be difficult
or you're going to have to pay someone
to be your nominee trustee,
if you want to control the entire process, do this.
Set up a Wyoming limited liability company.
Make it the trustee of your land trust.
You're the manager of that Wyoming LLC
and then you sign on it.
My name's Clint Coons with Anderson Business Advisors.
And in this video we talked
about how to buy property with a land trust.
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