Real Estate Investment – Is Land Trust the way to go?

For almost any person purchasing a real estate property, the million dollar question is: "Should I buy it under my personal name or should I incorporate to protect my assets".

For me, having multiple properties under the personal name is never a good idea. Any person can make a call or even search public records on the net to identify your assets. Potentially, if you got into a dispute and the plaintiff's attorney knows the full extent of your holdings, it could encourage frivolous litigation. Hence, legal eagles produced a way to hide and protect your assets.

The easiest of all is using land trust to shield your properties. Ideally, it is best to have a different land trust for each property that you own. Land trust agreements are not a public record and hence not easily tracked back to you. It protects your privacy from unwarranted search to a certain extent. Creating land trusts is very easy. You really don’t need a lawyer but certainly you need to be thoroughly familiar with the process.

Advantages of Land Trust:

• It protects your assets from prying eyes.
• You can create different land trusts for your different properties.
• Beneficiaries of the trust can either be a corporation/LLC owned by you or you yourself can be the direct beneficiary.
• No tax implications. All the profits or losses on the investment are considered personal and are covered under personal tax laws.
• There can be multiple beneficiaries in a trust.

• A trust does not protect you from personal liability stemming from the property. So if a sale goes bad, you can be held personally responsible.
• Most banks will not directly mortgage a property in the name of a trust.
• Doesn’t give you some of the tax benefits that are available as a corporation.