Hey guys, in this video I'm going to explain the five land
trust rules in detail.
These are important concepts to understand.
If you're thinking about setting up a trust
or want to know more about how land trusts works.
Now, if you want to know more just about asset protection in general,
how to properly structure your real estate investments, I want to invite you
to our free Tax and Asset Protection Live event at the link below.
But right now let's dive into the five land trust rules, explained in detail.
All right.
Number one, what the hell is a land trust?
If you're not familiar what this tool is, it's really not that complicated.
A land trust is just a document, right?
It's a contract.
It's something that you create stating that, hey,
I want a trustee to hold these assets
in trust for the beneficiary or hold title to the asset.
And so it's not that complicated,
unlike a limited liability company or a corporation that has to be filed
with the secretary of state somewhere to bring it into existence.
A land trust is like a living trust.
All you have to do is create a trust agreement where you have a trustee,
you have a guarantor, and you have a beneficiary.
As long as you have those three parties and you put some asset into the trust,
you have a valid trust agreement that will be recognized by the courts.
So it's great that we understand basically what a land
trust is, but what are the benefits of using the land trust?
Okay.
Why do people use this?
Well, couple the benefits of using a land trust.
Number one, privacy.
You see, when you set up a trust, a land trust, tell me to show you right here.
Here's my trust.
When I set this up, I have to have a trustee.
And you have, of course, your beneficiary down here.
And here's my property.
So if I'm going to transfer real estate into this trust
title is going to be held in the name of a trustee.
If you want to get your name off title to real estate.
This tool is phenomenal.
It's a great way to get your name off of title so people
don't know that you own the property and the way you do that
is by putting the property into the trust in the name of your trustee.
So if this property was owned, let's say, by Ken.
Ken would not want to be his own trustee of his trust.
You'd want to name someone else.
For example, I'm on thousands of trusts listed as a trustee.
So let's assume that Ken said, Hey, Clint, I want you to be my trustee.
So then I would get listed as a trustee of his trust.
So when Ken Deeds his property into the trust,
let's assume that the trust is called the Black Box Trust.
He's actually going to be transferring title to Clint Coon's
trustee of the Black Box Trust.
So the benefit of using the land trust is that it takes your name off of title.
Now, Ken has complete control of the land trust, and I'll explain that
in just a minute, how that works.
But now his name is off title.
So if somebody did an asset search or somebody put a judgment,
personal judgment against Ken individually,
that's not going to stick to this property.
A creditor is not going to know that Ken owns this property.
So privacy, lack of judgment, ability
to attach to property is another benefit of using the land trust.
A third benefit of using the land trust is easy transferability.
So when you put that property into a trust and you become a beneficiary
of that trust, and this trust now owns the property, as I'm showing you here,
let's assume that I want to transfer this property to my son.
Well, rather than deed the property directly to my son,
what I could do is just transfer him the beneficial interest in the trust
to make him the owner.
So a land trust also allows you to transfer title
to real estate without having to file multiple deeds.
Because once it goes into the trust, singular trusts like a box.
If the box is holding on some items and you want to give those all those items
to someone, you don't take them out of the box,
you just give them the box and they get everything that goes with it.
So Atlantis is really great for ease of transferability.
The other benefit of that is that it doesn't hit the public record.
So when I transfer title from my name
to my son's name, there's no record of that.
The only record that's going to show up in the recorder's office
is my initial transfer into the trust and where that trust goes from there.
No one's ever going to be able to discover that because that does not get recorded.
So that's a great benefit.
Another benefit using the land trust is what we call the do on sale clause.
If you're investing in a real estate, you have a mortgage on your property
and you're concerned that if you transfer that property into an LLC
that the lender may accelerate your note, then transferred into a trust lenders.
In my experience, it never accelerate notes when properties
have been transferred into trust because the land trust is viewed
as a state planning vehicle by a lender who looks on title.
So in that instance, if they were inclined to accelerate
because let's say that the interest rates have gone up considerably,
you've got a low interest rate and the lender starts wondering, hey,
we can go out there and we can force all these people to refinance.
Well, if it's in an LLC, they may be inclined to do that,
but if it's in a trust, you got the Garden Saint Germain Act behind you,
that's going to prevent that from occurring.
Land trusts are great for use for real estate investors.
If you're a real estate investor
and you want to buy subject to great way to take title is to use a land trust.
Or if you're investing at tax deeds
and tax liens, love the land trust for that type of investing.
So there's a whole myriad of benefits that come from using a land trust.
But the question comes down to is how does the land trust actually work?
I get that there's a lot of benefits there.
So the way the Land Trust works was I initially started showing you
that you create your trust and you got to have a trustee
and that trustee, as I would
as I told you, if you want, privacy, should not be you.
It should be either a third party
or if you want, you could set up your own LLC.
I typically set this up in Wyoming to be my trustee
of my land trust, and then you got to have a beneficiary.
So this is going to be you down here.
You're going to be the
the beneficiary of your trust, and then you've got your property.
So now what you'll do is you'll deed
this property into the trust under the name of the trustee.
Now, because the trust is like a contract, you can specify any provisions
you want inside of this trust.
Typically, when you set up this trust,
you're going to specify that the trustee beat your third party trustee.
Your LLC doesn't have any real control over the trust assets.
That means they can't sell the property,
they can't refinance the property, they can't live in the property.
All of those decisions are going to be remain with the beneficiary.
That's why for those of you
that when you hear about land trust and you say, well, gosh,
I don't want Clint on there as my trustee, he's going to take that.
And that's going to become part of his 300 property portfolio.
Now, it's under his name.
It's really not. I have no control over it.
All that control rests with the beneficiaries.
In fact, if you use a third party trustee,
you want them to resign their position immediately.
So, for example, when I'm on all of these land trust, I've resigned my position.
As soon as the client signs the deed, I resign and I'm off.
And then they are appointed as a successor trustee.
Now, what makes this work is the fact that the land trust isn't recorded anywhere.
So no one knows that I'm no longer the trustee.
They assume I'm the trustee of this trust when in reality it's someone else.
It's my client.
Because in the trust document
it states when Clint resigns, then you put in the client names.
Say Ken. Ken becomes a trustee of his trust.
That's all private.
So it keeps people from figuring out who's involved with that trust.
So what is the set up?
You get your land trust, their land trust the property.
They're all it's disregarded for tax purposes.
It all flows down to you because you're the beneficiary.
You're considered to be the owner of this trust.
Now, who can be part of a land trust?
Well, it can be individuals, of course, like I just showed you.
But many times what we're going to do is we're going to take your land trust
and we're to put that into a limited liability company.
We're going to assign it.
We're going to transfer the interest, just like I described.
Transferring your interest in your trust to your son.
And no one's going to know about that transfer.
Most real estate investors will transfer their interest to an LLC
or to a corporation.
And the reason why they're going to do that
is that the land trust itself doesn't offer asset protection.
Now, the only state in which it does offer it is in Florida.
Absent being in Florida, if you stayed on as beneficiary,
this trust and something were to happen with the trust property,
then the creditor would sue you personally.
So I don't want to be sued personally
if something goes wrong with my rental real estate.
So what I'm going to do is I'm going to have my land trust owned
by my limited liability company, so I'll transfer it or what we call
assign it over to the entity so any IRAs can be a beneficiary
of a land trust solo for one case Corporations LLC, you name it.
Even other trusts can be beneficiaries in a land trust
trustees, as I shared with you earlier, individuals.
Or you can set up your own private limited liability company.
I typically like to use Wyoming because in Wyoming when you set up an LLC,
no one knows that you're involved with that LLC,
so that keeps that anonymity going for you.
So once your property is in a land trust, is it locked down?
Can you sell property in the land trust?
Absolutely you can't.
Once you put property in the land trust, nothing changes.
You still have the control.
I have sold many properties using land trusts.
It's real simple.
All you do is you list the properties for sale.
You'll close and they'll send the proceeds to the trusts name.
There's no magic to it.
In fact, if you're selling properties to investors,
you may not want to sell the property out of the trust.
Maybe you want to sell the trust itself.
The land trust is a phenomenal tool for real estate investors.
And if you want to know more about how this land trust works,
what I'd like you to do is come to our tax and asset protection event.
This is for real estate investors.
We host these every so often there's a link below
where you can join at that event.
You're going to learn how to use land trust in your real estate investing.
You're going to learn about limited liability companies and corporations.
And then from there, we're going to move into the tax planning side of real estate
and how you can reap tremendous benefits.
The class is taught by myself
and my partner, Toby Mathis, who teaches the tax side.
I teach the asset protection, the business planning side for real estate investors.
And what's so unique about this event
is that when you come to this event, not only
are you going to be listening to myself and my partner
teach you about investing in real estate and using business entities,
you're also going to be able to get your questions answered live.
I bring a team with me of attorneys and tax professionals that are on there
helping answer individuals questions just like yours
when it comes to using business entities for their real estate investing.