What's up guys. It's Clint Coons here.
And in this video, I want to discuss.
The differences between a land trust.
And a living. Trust.
Okay, let's get started.
Now I get a lot of questions about what is the difference
between a land trust in a living trust when it comes to assets.
Asset protection. Holding real estate.
I can tell you this, there's a world of difference between these two.
However, when it comes.
To referring to.
These trusts, we don't want to draw those.
Distinctions when we're dealing with third parties.
Now, this can get confusing for a lot of people who have set up a.
Living trust, who have set up land trusts, or they're considering.
Setting up one of these tools.
You know, how do I.
Refer to it and what is it going to do for me?
So let me just break this. Down for.
You know, a living trust.
Okay. What is it?
What is a living trust?
A living trust is an estate plan. Okay.
So what that means is that when you put assets into this,
think of bigger, this is a big.
Box that you're going to create.
And it's designed to hold more than just real estate.
You want to put it inside. You know.
You maybe put your personal residence in here.
You can put your vehicles in your living trust.
You'll put your personal.
Checking account into the. Living trust.
Maybe you have a boat.
You put your boat into your living trust.
All of your personal.
Assets are going to reside in this living trust.
Now, the Living Trust is also.
Referred to as a guarantor. Trust.
Okay.
Now, what that means is that you've created it.
You're the guarantor.
You the. Trustee in the.
Beneficiary of this trust. So.
So it's a self settled trust. You've set it up.
It's ignored for federal tax purposes.
Everything flows down to you.
And you've held assets in the title of the trust itself.
And nothing really happens with the trust until such time.
As you're incapacitated or you pass on.
Now, when that occurs, if you're incapacitated, someone else steps
in that controls these assets for you or when you pass on, then your assets.
That are held in this trust are going to be.
Distributed down to whoever your beneficiaries are.
They go to your spouse or something like that.
So a living trust. Operates.
As an estate plan.
It's designed not to do.
Anything really with your assets until you're in a state where
you can't make decisions for yourself or you've passed.
Away.
A living trust can't be.
Transferred to someone else while you're living.
You can't say, You.
Know what I want to give you 20.
5% of my living trust.
That's not the way it would work.
With the living trusts. If you wanted to give someone.
25% of your. Assets, you would.
Actually have to transfer your assets.
To these individual directly.
So you would just pass on the assets.
And so by doing that.
Let's say it was a piece of property, you got to record a deed.
So there's a. Public document.
That's recorded showing the transfer from the trust to these people here.
Now, a land trust is different.
Than a living trust.
Now a land trust is a grantor trust.
And that when you create a land.
Trust. Over here. Yes.
You are you are setting up the trust where you the.
Trustee and you're the beneficiary. In the grand tour.
But this is a title holding trust.
Okay.
Now, as a title Holding Trust, this land trust.
It's still a guarantor trust.
Just like the living trust.
And that's why many times when we.
Refer to these trust.
Documents will tell. People, if you're dealing with a lender.
If you're dealing with the bank.
When you're if you want to open an account or a title company.
You're going to tell them.
They ask you what type of trust you have.
You don't tell them you have a land trust.
You tell them you have. A guarantor trust.
Same with the living trusts. You always tell them you.
Have a grand tour trust.
Because we want to create the presumption that both of these trusts.
Are equal. That you set something. Up for estate planning.
But really that's not the way the land trust is designed, because with the land
trusts it's similar to the living trust.
You've got a trustee, which is you and.
Or an. Entity that you own and you've got a beneficial.
Share, which is you.
All right.
Just like we have in the living trust over here.
Now, the difference is in the design of these trusts,
because trusts are like contracts, you can set them up with.
Different provisions.
Reflecting the desires.
Of the guarantor when they create the trust.
And that. Means this, that we can set it up so that the.
Beneficiaries in a land trust have the ability
to transfer their interest at any.
Time.
So think of it like stock in a company.
You can transfer.
Stock to someone while a land trust is set up where the.
Beneficiaries can transfer their interest now if.
They don't.
We also have estate.
Planning provisions built into a land trust that
whatever you own at your passing, if if you're the owner, if you go to your
your beneficiaries or can be distributed over to your estate.
So you really got both built into.
The trust, whereas here it's just.
Purely estate and you can't assign anything.
While you're alive. That is the trust over here.
You've got the state aspect of it.
If you're holding it when you pass away. Which you shouldn't be.
If you watch my channel, you'll know that your land trusts should be in an LLC.
But there's the other thing about that land trust
that that we like is that when you if you did decide.
To transfer.
That trust or those assets, let's say I had a piece of property.
In here.
And I want to get that property to my kids today,
but I don't want people to know about it.
All I would have to do is transfer my son.
And daughter.
My beneficial interest.
I can't.
Coons hereby assign my beneficial interest to my land, trust to my kids,
and then give them that assignment.
Now they're in charge of the trust.
I would resign my position, most likely as trustee.
I don't have to. My LLC could stay on there as trustee, but.
The point is they now become the owner of that trust,
which by the fact makes them the owner of the property
that is not recorded.
No one knows. About this transfer.
Whereas if we if.
We had that same property right here in the Living Trust, as I told you.
Earlier, if you. Wanted to get that property.
Over to your beneficiaries, you would have to deed it.
And that's going to be a matter of public record.
So when it comes to setting up land trust, what we're.
What we're going to be doing, focusing.
On is this ability to. Transfer our interests.
And that is the main distinction between the land trust and the living trust.
But now that you know that if you have both or you just have the land trust.
And you're operating with third parties, I highly encourage you
to always refer to these as guarantor trusts.
And if they ask, why did you create this trust?
Tell them it was for estate planning.
Nothing. You're saying there is incorrect.
It is a guarantor, trust and it was set up for estate planning because.
There's an estate planning aspect to it.
You just don't have to use it that way.
And the.
Reason why you want to say this and make them
make people think these are the same things, is that there's.
Much more familiarity with third parties.
With living trusts.
Than there are with land trusts.
So we want people to assume that because then it invites fewer questions.
Now, of course, if they ask for a copy of the trust
document, well, now that now the gig's up and they're going to find out, hey.
This isn't really what we.
What we typically expect,
because they're going to look at that language,
which allows the beneficiaries to assign their interest
and they're going to say, hey, what's this?
And then you're going to have to explain it.
Now, there's ways to even get around that.
I've got a video on Land
Trust about dealing with lenders, how you restate it to make it
look like a traditional living trust.
You should check out that video.
But that in a nutshell, is different between a land trust.
And a living trust in why people use. Them.
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