- Hey Clint Coons here with Anderson Business Advisors.
And in this video we're gonna discuss how to sell property
that's held in a land trust.
Okay let's get started.
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Okay so here's what comes up.
You have your property,
you've put it into a land trust
and you've got it all set up there
and we've run this structure for quite some time.
And we have our land trust as I always talk about,
owned by a limited liability company,
which it means that the beneficiary
of the trust is this LLC just like that.
Now when you've set all this up,
most of the time what we've done
is people will set up the trust
and they're listed as the initial beneficiary on the trust.
Because they're transferring existing real estate
into this land trust.
And you have to oftentimes send a copy
of the trust to the County Assessor
so it doesn't result in a reassessment
of your property taxes
or an increase in your property tax basis.
So you wanna see the individual as the beneficiary,
and then whoever you got up here as your trustee,
maybe it's me as your nominee,
or maybe you're using a Wyoming LLC,
that we've talked about in some of my other videos
as your trustee.
Whatever the case is,
that's usually how it's set up
and then you assign your beneficial interest
in the land trust to your limited liability company
that you have created for it.
Of course you've done this for asset protection,
but here's the thing,
now it's time to sell the property,
and this is the way you have it set up.
So what do you do?
Well you could unwind it,
pull the property out put it in your own name
and sell it and some people do do that.
Does it make it easier?
100% it does.
But maybe you don't want to sell it in your own name
because you're concerned about potential liability
from the buyer coming back against you.
So you wanna sell it out of the trust name,
or you don't want people to know that you've sold property,
you don't wanna show up on the public record,
so you end up selling it out of the trust.
Now I've sold multiple properties out of land trust before
and what I'm gonna tell you is that some of the experiences
that I have personally had in selling my own real estate
out of a land trust and how you wanna work around that,
to make the process that much smoother for you.
So first thing,
when you're setting up a structure like this, okay?
To make it easy to sell in the future,
always have the same name for these entities.
So let's assume that this LLC is going to be a G four LLC.
Okay that's what I'm gonna call my LLC.
Now you're setting up this land trust
and you're gonna buy a property that's on seven 32 Broadway,
and you think,
"All right well
"I'm gonna name my land trust as seven 32 Broadway Trust,
"so I know what property is held inside of it."
Now I've told you before in other videos,
"Hey, a great way to name your trust."
And that's fine, it works.
But if you're gonna do that,
then you should name your LLC the same name.
So if this was seven 32 Broadway Trust,
this should be the seven 32 Broadway LLC.
Now why?
Why do I wanna do that?
Well because most of us when we create these structures,
the only bank account that's getting set up is in the LLC,
it's not set up in the land trust.
I've never set up a bank account
in any of the land trusts that I've ever established.
Now why do you want this set up in this manner?
Because here's what happens when you go to sell.
When you go to sell the property out of the trust,
the title company escrow is gonna wanna send a check
to your trust name,
they'll wanna wire it to your trust.
Now the problem you're gonna have,
is that if you have G four down here LLC,
and you say,
"Well just wire the money to G four LLC,
"because I don't have a bank account for my trust."
They'll most likely not do it.
So they'll say, "No we have to send it to the trust,
"we either wire to the trust,
"or we're gonna send you a check."
So what has happened in the past
for me is that whenever I had the LLC
the same name as the land trust,
I can always kinda sneak it by.
I would send them the LLC name,
the routing number, the account number.
And so when they went and they did the little test
to see if it matches up they say,
"Oh yeah, seven 32 Broadway, seven 32 Broadway"
Away it went and I'd collect the money that way.
Or if they sent me a check,
I could take the check down to the bank
and say,
"Will you deposit this?
"See they put trust and it should have been LLC."
And then they'll deposit it into my account.
So that's kind of a workaround
that I've been able to work for me is just have this
and this name the same
so that you can deposit those funds.
Now maybe some of you that are watching this video right now
that ship has already sailed for you.
And you're thinking about selling property in the future
that you've already set up in G four LLC right here.
And we've got seven 32 Broadway Trust over here owning it.
You're like,
"Clint what the hell do I do now?"
Don't worry I'll give you another way of fixing this.
So this was a situation
that I had with one of my other properties.
I had a limited liability company set up G four for example,
and I had the seven 32 Broadway Trust.
Now of course I went through the same process
with the escrow in the titles said,
"Send me the money to G four."
They said, "No way we won't send the money to G four."
I was like, "All right, well just send me my check."
And so they sent me the check to seven 32 Broadway.
So now I'm sitting on this check
for seven 32 Broadway
and say it's $85,000.
Well what do I do with it?
Well I have a couple choices.
I could go down and actually open up a bank account
for seven 32 Broadway,
but that's gonna be a pain in the butt.
And I don't wanna have to go through that process,
get the account established only to have to shut it down.
So let me tell you a little hack I came up with,
what you can also do is this,
file a DBA that's all I did.
I went down I registered a Doing Business As
an assumed name in some places.
So G four LLC filed a DBA seven 32 Broadway Trust.
So I took that down to my bank
and I said,
"Hey, you know that G four LLC that I have with you?"
"Yep."
"I'm now doing business under the seven 32 Broadway Trust.
"Here's my doing business certificate right here.
"Take a look at it."
And they took it and they put it in file.
I said, "Oh by the way,
"I'd like to make a deposit of this check."
In it went
and now I had access to those funds.
So that's another way in which you can sell property
in a land trust and make sure you get the proceeds.
And the reason I wanna share this with you
is because we talk about all these cool techniques.
And there's a lot of people out there
that will teach you these same techniques,
or they talk about it.
Maybe they watch my videos
and go back and share them with other individuals,
but they don't know the details, right?
Because they haven't done it.
And so when you're doing this,
it's great to talk about it.
You have to understand how do you execute?
How do you implement?
At Anderson, this is the stuff that we do,
as I explained I am an avid real estate investor,
I'm coming up on 150 properties in different asset classes.
And so I'm doing the same stuff I'm educating you on
and as I do it I find out different ways
to make things work.
So I'm gonna share with you one other strategy here
that has also come up.
So in another deal that I did inside of a land trust,
I had the property and same situation again.
I had G four LLC, for example, seven 32 Broadway.
Now they would not send the money to G four LLC,
because I already knew that was coming,
but I tried to do it anyway.
So when they sent me the wiring instructions,
I put down G four LLC, put down the account number,
routing number, sent it back,
done done done done done two hours before closing
their office was gonna close. They call me up and said,
"We can't do it, it's not the same."
I was like, "Okay.
"So here's what we can do then.
"What I'd like you to do then
"is mail me the check personally,
"don't send it to the name of the trust."
And they said, "Well I don't know if we can do that."
I said, "Why is that?"
They said,
"Well because we don't know if you can receive the check
"because we have to get the beneficiary to sign off."
Now see that's key right here,
you have to get the beneficiary to sign off.
Now in this particular deal,
they wanted to see a copy of the trust,
which in most of the deals they do.
And so when I send the copy of the trust over
to title one of the things that I do,
and this is what I would advise you to do as well.
I send them the original trust.
I do not send them the assignments.
So when they receive this original trust,
they see my name on here as the beneficiary right there
and of course they see the trustee.
So I explained to them,
I said, "Well I'm the beneficiary."
And they said, "Well we need something
"that states you're willing
"to release these funds to yourself."
I said, "Are you serious?
"This is what I'm dealing with here?"
And of course that's what they wanted for their legal,
so I wrote them a little letter,
I said, "Clint Coons is the beneficiary,
"authorizes the bank to distribute the proceeds
"directly to Clint Coons individually
"and not to the name of the trust."
So I had them send it to the beneficiary
and they knew I was the beneficiary
because the trust that I shared with them
was a trust that had me listed individually,
not my limited liability company,
I did not share the assignments.
Now on occasion,
this is what's gonna happen.
You're gonna set your trust up
where the trust has the LLC listed as a direct beneficiary,
that's fine.
So if you do that and now you're thinking,
"Well if I share that a trust with title,
"when I'm selling the property and they see the LLC,
"is that gonna create problems for me?"
Yes it will.
Because now they're gonna wanna see copies
of the limited liability company.
It's just gonna start going in a different direction
for you and you just wanna get to closing,
you wanna get your money and get onto your next deal.
So this is what I would recommend you do,
this is what I've done.
I turn around and I restate my trust agreement.
I change it, modify it.
I'm free to do that,
I can just assign myself the interest
assign Clint the interest directly,
restate the trust agreement,
turn over the trust agreement
to them for purposes of closing,
that shows me as the beneficiary,
then they don't even see the LLC.
I do that and those of course in those situations
where I wanna get those funds directly
and I don't want the LLC involved
because it's gonna throw off title.
So hopefully you got some information out of here.
There's different ways to put this together,
to make it work for you.
I know it can be frustrating sometimes
because what happens as real estate investors
we're dealing with people who do not understand what we do.
They are pencil pushers, check the box people
and everything's gotta look the same way.
And when you talk reason to them,
they don't hear it just flies right over their head.
So what we have to do is we understand the confines
in which they have to operate in,
and we provide them the documents to fit within the box
that they're used to dealing with.
And that way it makes it go that much smoother for you.
All right guys all the best with your investing
and be sure to catch my other videos on land trust.
And if you like what you see,
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and it helps me then interact with you
and help you move down the right way
when it comes to investing in real estate
and using entities from a tax
and asset protection point of view.
Take care.
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