Types Of Trusts Used By Real Estate Insiders

Summary of Trusts, Benefits, and Uses

1) Trusts for holding real property

These are not named land trusts except in the states that have a statute covering the topic. There are seven of those. In other states they are just called trusts, or revocable trusts. They are allowed in all 50 states. The land trust originated in Illinois in the 1890s. There are over 120 years of legal decisions covering all aspects of use and administration.  There are dozens of benefits, the greatest being the privacy of ownership. Avoiding probate, judgments, partition are among its features. They provide the best platform for purchasing, managing, partnering, financing and estate planning.

2) Trust for holding IRA funds

This irrevocable real estate investment trust is purchased by an IRA owner and this person directs the investment activities into real estate, notes, personal property and any other permitted investment. This person, the taxpayer, has an independent trustee that signs the checks and they have immediate availability of funds without the cost or delay of going through the custodian. This hybrid trust is a benefit to note investors, since they may end up owning real property and this trust has the powers to allow holding real estate. Thousands of IRA owners are using this Checkbook-Control Trust to turbo-charge their retirement accounts.

3) Personal Property Trust

The most lively and productive discussions centered around the use and benefits of this little-known tool. There were many note investors at the meeting and they were particularly interested in the privacy and safety of holding their notes in the name of the trust. 

 All 50 states allow it.  The Uniform Trust Code was reviewed along with the 23 states that have adopted it. Other states have adopted an Asset Protection trust. Similar to the land trust, the personal property trust must be formed in accordance with each state law to be valid.

A personal property trust can be used as a manager of an LLC or the director of a corporation. A summary of the interconnections between these three trusts, options, and 1031 exchanges provided many combinations of investment strategies that are not available to the normal title holding entities. There can be contracts for beneficial interests, options on beneficial interests, exchanges of beneficial interests, contracts for options and several other unique strategies. They are all legal, ethical, and off the public record.

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