A land trust is an unknown entity. It is easily the least known and understood business entity in use today. Technically it is not a business entity, but rather a trust agreement between a beneficial interest holder and trustee. As its name implies, the land trust is used to hold title to real estate. There are, however, definite benefits which come from utilizing a land trust.

The land trust is an excellent tool if you desire anonymity of ownership of real estate. The real estate is held in title by the trustee of the land trust and not by the beneficial interest holder. Consequently, the true owner of the real estate is not publicly listed anywhere. And, in some states, particularly Florida, it is very difficult to discover who is the beneficial interest holder of the land trust. Other states, such as Arizona, require the trustee of the land trust to disclose the beneficial interest holders of the land trust in the event of a judgment against the land trust.

The land trust will permit the easy transfer of the property to a third party, and this transfer will not be seen by anyone. Transfer of the land trust and the real property held therein to a third party can be accomplished confidentiality because the beneficial interest of a land trust is a personal property asset and not a real property asset. As such, the transfer does not have to be recorded or disclosed to anyone. So, title to the property remains in the name of the trustee of the land trust. The buyer of the property becomes the new beneficial interest holder of the land trust. And this transfer of the beneficial interest holder does not get recorded or disseminated to any third party.

The land trust is a disregarded entity by the IRS, so it does not even have to file a tax return. The financial information which would otherwise have been disclosed on the land trust’s tax return flows to the beneficial interest holder’s tax return and is disclosed there. As a result of this fact, multiple land trusts can be used to protect multiple pieces of real estate. Each land trust can hold title to one piece of real estate. So, if one land trust is sued, all the other land trusts are not touched and the real estate held by those land trusts is protected.

Unfortunately, the land trust does not, by itself, provide asset protection for the beneficial interest holder. A judgment against the land trust can be collected from the beneficial interest holder. However, CSS Nevada has developed an entity structure which uses land trusts and other entities to not only shield the true ownership of the client’s real estate, but also to protect the client in the event of a law suit. By making the beneficial interest holder an LLC that holds no assets other than the land trust’s beneficial interest, the judgment creditor cannot collect from the client for he/she is no longer the beneficial interest holder. And the member of that LLC is not liable for the judgment either, for a member of an LLC is not liable for the debts and obligations of the LLC.

Contact CSS Nevada to determine if one or more land trusts should be part of your asset protection structure.

Disclaimer: The content on this website has been prepared for informational purposes only. It is not intended to be nor do we constitute legal or tax advice. Each situation with relation to corporate and clients needs are unique and must be consulted directly on an individual (one to one) written contract basis with Corporate Support Services of Nevada, Inc. (CSS NEVADA). Content within website and videos are only examples of strategic asset protection strategies.