Website design By BotEap.comIllinois was the first state to create land trusts and is the reason other states sometimes refer to such trusts as “Illinois land trusts.” Florida, Indiana, South Dakota, Virginia, and Hawaii are among the other states that recognize land trusts by law. Many other states recognize the validity of a Land Trust but do not have specific statutes authorizing its use.

Website design By BotEap.comUltimately, the property itself can be reached in a lawsuit (even with an out-of-state trustee), but your plan should be to stay as far out of the eye of the storm as possible so they don’t hit any of your other assets. . . A leveraged judgment bond against your individual 10-unit building is a problem. But, a judgment entered against you, in your personal name, is a much worse situation.

Website design By BotEap.comThe next important piece of the land trust puzzle is the DIRECTOR of the trust. When a deed is prepared to transfer property to a land trust, the deed must state that the trustee simply has title to the property without any right to mortgage, lease, conveyance, exchange, option, barter, etc. Without a written address from the beneficiary or someone designated by the beneficiary, the trustee cannot act and nothing can happen. However, if the beneficiary appoints a director to act on his behalf, the fun begins.

Website design By BotEap.comThe length of the term and the limits of authority can be restricted for the director in the land trust agreement, thus ensuring that abuses do not occur. Once the director’s mandate expires, the power of direction may automatically pass to the SUCCESSOR DIRECTOR or revert to the original beneficiary. It is important to keep a director for your trust if he wants “control” of his trust out of his hands and into the hands of someone he can trust.

Website design By BotEap.comIt is possible for one person to be all of these people: trustee, beneficiary, and director. Hopefully now you can see the downside in such a structure.

Website design By BotEap.comLawyers often recommend that the trust bear the name of the owner, such as THE JOHN DOE LAND TRUST, and that the owner fill all of the positions listed above. If your attorney suggests this, find a different attorney (preferably one who has studied Land Trust law for more than an hour).

Website design By BotEap.comIts director must be chosen just as carefully as its trustee. Again, if you’ve developed friends who understand “the show,” you can all help each other out and achieve the privacy you’re looking for. Once you begin to understand land trusts, you’ll discover that you don’t really even need to name a trustee when forming a trust. You can simply give the trust a name (what’s in a name; see below) and “wing it” until such time as you need to re-deed the trust property. But this is another topic too long for this report.

Website design By BotEap.comAgain, ideally your director should be located in a different state (and use a PO Box address) than the rest of your “group.” If this is not possible, at least select your director from a city other than your own. All of these positions we are discussing must have successors listed in their trust agreement to ensure the orderly transmission of power, in accordance with your wishes.

Website design By BotEap.comIt is extremely important to keep the trustee and principal legally separate. The trustee should never do anything with the trust assets unless directed to do so by the director in a Letter of Instruction. If you don’t have confidence in a single director, he can create a Board of Directors. Therefore, he may require a majority vote before taking any action (instruction given to trustee).

Website design By BotEap.comYou can select some relatives and some non-relatives to serve as co-directors. Or you can put some of your heirs on the board of directors to introduce them to the world of land trusts (so they’re familiar with the subject when it’s their turn to “take the reins”).

Website design By BotEap.comWhatever you do, make sure you can trust your manager(s) implicitly and select someone who is similar in mind to you. If that person is not available to you, then it may be the director of your own trust. The appointment of a director is an unregistered private act that needs to be published only when required by an act of the beneficiary (you). So you can still retain control in a very indirect way.

Website design By BotEap.comStates have different laws when it comes to the use (and abuse) of land trusts, but Illinois is by far the granddaddy of them all. Illinois actually developed the modern “land” type trust from English common law; however, specific statutes in other states allow for the existence of land trusts.

Website design By BotEap.comWhen drafted correctly, land trusts can be used in most states. However, some states are smarter than others, so check your own state’s laws. For example, in some states you can avoid the transfer tax on real estate transactions by placing your property in a land trust and then selling the beneficial interest in the trust. However, other states have passed laws requiring notification to tax authorities if even a portion of a beneficial interest is transferred (ie, Illinois).

Website design By BotEap.comThis way, they can not only charge you a transfer tax, but also increase your real estate taxes as a result of the new sale price. Fortunately, no state has yet been able to find a way to tax the sale of an OPTION on beneficial interest. Options are extremely private transactions and will be covered in future reports.

Website design By BotEap.comWhen financing a property held in trust, a commercial lender will require (if he is smart) an assignment of beneficial interest and an assignment of power of direction. This effectively gives the lender control of the property and prevents any funny business on the part of the beneficiary. Obviously, dealing with a commercial lender violates their confidentiality as a beneficiary.

Website design By BotEap.comAlthough by having your trustee sign the note and mortgage (and you only sign the assignment and warranty forms), at least your name won’t be published in the local county register when all the paperwork is filed. In other words, no one will know that the property is yours and that you are financing it.

Website design By BotEap.comOne of the most important things to include in your land trust agreement is the restriction that your trustee never reveal the names of the beneficiaries or their locations. You can also prevent the trustee from disclosing the location of the beneficiaries or releasing a copy of the Trust Deed without the written permission of 100% of the beneficiaries, or a written court order containing an indemnification clause protecting the trustee from a “breach” lawsuit. trustworthy.”

Website design By BotEap.comNow, if your trustee is pushed too hard, your only alternative is to resign as your trustee, thus maintaining your confidentiality. Also, if your trustee is out of state and only has a PO Box address, it will be very difficult to find them to start legal proceedings.

Website design By BotEap.comIt is not illegal to operate under a “fictitious” name. Just fill out a simple form at your county courthouse and rape – you’re someone else! Imagine that your trustee operates under a fictitious name and your trust operates in the same way. This will drive process servers crazy!