Three Reasons to Title Your Investment Property in a Land Trust and Not and LLC
In previous articles, we’ve discussed the main benefits of holding title to real estate investment property in a land trust. A land trust is just like a standard trust, except as the name implies, this type of trust holds title to real estate or real estate related assets. Real estate notes, deeds and other agreements can be held in a land trust. A land trust can be recorded as either a revocable or irrevocable land trust. The majority of land trust are structured as revocable trust. However, we’ve also had several inquiries lately about holding title to real estate investment property in an LLC. While this is an option, based on our own experiences as real estate investors, we know of a few reasons why a land trust is a better title holding vehicle. In this article, we’ll discuss three reasons why you should title your property in a land trust rather than an LLC.
Land Trusts Offer Privacy
One of the main benefits of a land trust is that it offers privacy that you can’t find in an LLC. When you setup a land trust, you’re given the choice to create a name for each trust. This name can be anything, as long as it doesn’t infringe on copyrighted material. In the past, we’ve advised clients to name their trust wisely and in such a way that no personal connections can be drawn from the trust title and those parties involved in the trust. This creates a layer of protection, since even if someone wants to attack one of your assets, they would have trouble connecting those assets to you. For record keeping purposes, a land trust is documented under its official land trust name. Uncovering ownership details behind a mysterious sounding trust like 321 CWL Land Trust may be more trouble than it’s worth. This is why a vague land trust name can be the secret to preventing lawsuits before they even start.
Land Trusts Can Help You Avoid Losing Everything With A Single Lawsuit
When you put the title to each property you own in its own individual land trust, it separates the liability associated with each. In contrast, if you hold all your property in a single LLC, it not only doesn’t provide anonymity but it also creates a scenario where an attack on one property can lead to an attack on the other properties. This is because all the property is held under the same shared entity. With a land trust, your potential losses are capped at each individual asset. Thus, potential lawsuits are managed, rather than in an LLC where all your hard earned assets are up for grabs.
Land Trusts Provide Efficiency
Lastly, a land trust provides efficiency when it comes to financing and selling your property. When each property is held in its own separate land trust, the financing or sale of one property doesn’t impact the other properties, as it may in an LLC holding multiple properties. Our legal team is highly experienced in how to protect and streamline the management of multiple properties. We can help you create a comprehensive asset protection strategy today.