If you want to protect your privacy and real estate assets, a land trust is a great way to do so. Why? A land trust inherently provides anonymity on public records related to the ownership of a property. For those investors looking for increased protections, however, a limited liability company (LLC) can help.
As the name implies, a LLC limits your personal liability. Legally, your LLC is responsible for its own debt and obligations. As such, your personal finances and assets are not subjected to any court judgments or legal proceedings against your LLC. If you fail to pay mortgage on a home purchased through your LLC, only the LLC itself is responsible for repaying this debt. LLCs are also exempt from having to hold annual meetings or filing extensive records or reports. The Internal Revenue Service (IRS) classifies LLCs as proprietorships or partnerships. As such, an LLC is able to take advantage of tax breaks associated with them. For example, an LLC does not pay taxes on any gains. Instead, it is used as a pass through vehicle and taxes are paid through the owner’s personal tax returns instead.
A land trust provides property owners with complete anonymity. This is a crucial feature that can obscure your net worth and limit potential lawsuits. This is because, with a land trust, the property’s owner is listed as the name of the trust itself. Your personal information is not associated with any public records related to ownership of your property.
Using a land trust with an LLC as beneficiary, you also retain full control of your property. You can manage it as you wish, rent it to others, or even sell it whenever you want. This is a great way to protect your asset and you from potential money sharks looking to make a quick buck off someone they believe has a high net worth.
When you combine land trusts with LLCs, you get the best of both worlds. How? Let us take a look at some of the most frequently asked questions regarding land trusts and LLCs.
When you establish a LLC, you should consider forming a series LLC. Why? A series LLC segregates assets. Each asset under the various “series” are protected from lawsuits or judgements that may be made against one and other. In other words, if you establish a series LLC, each with its own land trust, the properties under Series LLC A, B and C are exempt from judgments against Series LLC D. This protective barrier between LLCs and assets is a great way to further protect your investments, while maintaining your anonymity.
In a land trust, you designate a trustee. This is true even if you establish a land trust in support of an investment made through your LLC. At Royal Legal Solutions, our professionals have experience with both land trusts and LLCs. Our experts are fully aware of the best ways to protect your assets and can advise you based on experience, a thorough understanding of state and federal laws, as well as our professional insights into the benefits of the land trust. In fact, Royal Legal Solutions is able to assist you with establishing your land trust and your LLC. We also have experience with assisting clients all over the United States, as well in Canada. If you are interested in scheduling a consultation with Royal Legal Solutions, please contact us today.
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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