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| How to
Own Land Anonymously Through the Little Known “Land Trust” |
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| This article first
appeared in the Sovereign Society Newsletter. |
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Could you benefit from
a structure that disguises your ownership of real estate?
If you own rental properties and
have been sued by your tenants, or you are otherwise a target for litigation,
this structure should be of particular interest. And in this age of the
Internet, potential litigants no longer need to go down to the county courthouse
or recorder’s office to find out who owns a particular property. They just
need to conduct an instantaneous computer search to locate all property
you own in the United States. |
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| Fortunately, there’s a better way
to own real estate. It’s called the land trust. The concept is particularly
popular in American states that have specific statutes enabling such trusts,
e.g., Illinois and Florida. Most other states recognize the land trust
under common law4 as a revocable or living trust. |
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| As with any trust, in
a land trust, the trustee — generally an attorney, law firm or bank — holds
legal title to all trust property. However, in a land trust, the named
beneficiaries retain use of the property and any income it generates. In
addition, the trustee can act only when it receives written instructions
from the beneficiaries, who maintain complete control at all times. |
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| From a privacy standpoint,
a trust is superior to business entities such as corporations or limited
liability companies. There is generally no requirement to register the
trust. Nor are there public records of officers, directors and shareholders.
The trustee keeps control of the trust records and the identity of the
beneficiaries in a secure location and will not reveal this information
without a subpoena. No one knows about your beneficial ownership except
you, your attorney and the trustee. |
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| You can convey property
you own in your name into the trust, but it is better to have the seller
convey it directly to the trustee. This avoids having real estate records
ever showing that you owned the property. |
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| Anonymity may also be desirable
in situations where the seller is reluctant to accept your offer. When
Walt Disney was purchasing land in central Florida to build Disney World,
he used land trusts to disguise his intentions so as not to drive up the
price. |
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| Other advantages of the land trust
include: |
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| Asset protection — to
a point. Real estate in a trust is protected from judgments and liens against
the beneficiary. If a judgment is entered against you, the lien will not
automatically attach to the property, since the title is not in your name.
If the trustee resides in a different state than the property is located,
it will be difficult and expensive for creditors to discover your interest
in the property. |
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| However, because you maintain control
of the assets in a revocable trust, your beneficial interest in it is subject
to creditor claims. If you are sued and a judgment is entered against you,
a creditor can force you to list all assets you own and (if he’s smart)
any beneficial interests you hold in trust. The creditor can then force
you to sign over your beneficial interest to him. (In contrast, in properly
prepared domestic irrevocable trusts or foreign asset protection trusts
(TSI 10/02),5 creditors do not have this power.) |
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| Ease of multiple ownership. When
two or more people own a parcel of real estate, each one must sign every
legal document (deeds, mortgages, etc.) related to that parcel, then have
those documents notarized and placed in public real estate records. This
can lead to unwanted disclosure, not to mention difficulties to investors
who don’t live in the area where the parcel is located. But with a land
trust, since the trustee holds title, only the trustee needs to sign, notarize
and record documents (in his name, not the name of the investor). |
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The
Sovereign Society, headquartered in Waterford, Ireland, was founded in
1998 to provide proven legal strategies for individuals to protect their
wealth and privacy, lower their taxes and to help improve their personal
freedom and liberty.
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The
Society's highly qualified contacts recommend only carefully chosen banks
and investment advisors as well as financial and legal professionals located
in select tax and asset haven jurisdictions around the world. The Society
provides advice concerning the establishement and operation of offshore
bank accounts, asset protection trusts, international business corporations
(IBCs), private foundations, second citizenships and foreign residency,
as well as practical safeguards for financial, Internet and personal privacy.
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The
Sovereign Society stands alone in fulfilling this singular, international
offshore service role for its members. To learn more about our organization
and how you too can become a member, Click the link below:
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Yes,
learn what it is that the Sovereign Society can do for you. The Sovereign
Society's highly qualified Council of Experts, consist of carefully chosen
professionals located in select tax and asset havens around the world.
Their experts have spent their careers discovering the best global investments,
the safest tax havens and the most secure devices in which to protect your
assets.
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Access
to The Sovereign Society’s Council of Experts is one of the most-cherished
benefits of Sovereign Society members. Their global network of banks, investment
specialists, financial consultants, and legal professionals have proven
themselves, over many years, and to thousands of Sovereign Society members,
as being the best in the business.
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| No right of partition. Whenever
two or more persons or entities share ownership of real estate, any owner
can at any time demand partition; i.e., to sell the real estate and divide
the proceeds. In contrast, real estate held in trust cannot be partitioned.
However, any beneficiary can transfer part or all of his beneficial interest
in the trust to another party. |
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| Probate avoidance. Real estate holdings
are generally subject to probate — that costly and privacy-invading legal
procedure by which your estate passes to your heirs. However, a trust agreement
can provide for succession of beneficial ownership upon the death of named
beneficiaries — your children and grandchildren, for instance — without
going through probate.6 |
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| No adverse tax consequences. There
are no tax consequences of transferring property into a revocable trust
such as the Illinois land trust. Since you as the grantor maintain control
over the property in trust, you are considered the owner for tax purposes.7
In contrast, owning property through a corporation may subject you to two
separate layers of taxation and in any event will require the submission
of a tax return for each year of its existence. |
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| Important: Form
a land trust only after seeking legal advice to insure that it can be used
in the state where you intend to purchase property and that the trust will
not be required to register as “doing business” in that state. Registration
greatly reduces the privacy advantages of the trust. |
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| For
More Information |
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If this brief introduction to land
trusts whets your appetite, check out the following links for banks in
Illinois that offer trustee services:
www.bankfinancial.com/PerLandTrust.htm;
www.lasallebank.com/other_personal/advantages.html.
Also see Denis A. Kleinfeld, “Using
Florida Land Trusts to Protect Real Estate.” Offshore Investment, April
1999. Link: www.offshoreinvestment.com
(subscribers only). |
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