One thing I tell all my clients is that they need to put their investment properties into a land trust—rental property assets included. A land trust is a very simple and inexpensive instrument for purchasing and retaining title to a property. The privacy a land trust affords you is one of the key elements of the asset protection strategy we recommend.
To keep your assets away from the prying eyes of predators, you need to set up a separate land trust for each of your rental properties. Doing this keeps your properties insulated from each other such that any liens or judgments against any of the properties don’t affect all your investments. Some of the benefits of using a land trust include:
Any judgments or liens against the beneficiary of the land trust (you) cannot attach to the property. Unlike an LLC, the owners of the land trust (beneficiaries) are not publicly available. If you held the property in your own name then you’d be in for a rough ride. If someone tried to sue the trustee, then they would first need to find them.
I can assure you this is not a job that any attorney with a good head on their shoulders would be looking to take on. This is because all of our trustees are located out of state and their last names are different from those of the beneficiaries. Furthermore, the addresses listed on the deed to trustee are P.O. boxes. This scenario makes you an undesirable target to any would-be litigant. No one wants to fight a ghost.
If the litigant was hell-bent on getting one over you, they would have no option but to sue the trust through a publication in the newspaper in the county in which the property is domiciled. I can assure you that this will only add to the expense and trouble of the plaintiff. It’s a dead end.
The takeaway message from all this is that you should hold all your investment property in separate land trusts. You can make an LLC the beneficiary of the trust without putting your property at risk. If the LLC (beneficiary) is sued, then a judgment against it would not affect the title to each property since the LLC doesn’t hold title to the property.
Asset protection is not a do-it-yourself gig. My name is Scott Smith. In addition to being an attorney, I’m a real estate investor myself. Before I began specializing in land trust rental properties, I would play for the other side.
If you’re considering a land trust, let us help you protect your valuable investments with a foolproof asset protection strategy from people who’ve been around and seen it all. Contact us at [GLOBAL VAR=phone-number] for a free consultation. We’ll help you make your investments bulletproof.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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