Who Should be the Beneficiary of a Land Trust

hi Clint cin here with Anderson business advisers and in this session I'm going to discuss who should be the beneficiary of your land trust you know just the other day I saw this an individual who brought me their Lan trust that they had set up and they' done this you know they they set it up for asset protection which a lot of people do so they created their land trust right here and you know when you're setting up a trust you have a trustee and a beneficiary so you have the trustee and they named an individual here as their trustee which you know was a problem watch my segment on who who should be your trustee so that was an issue I'm not going to go into it in this segment but anyways they had themselves uh this individual here as a trustee and then they had their limited liability company set up down here as the beneficiary of the land trust now I asked him I said why is your LLC the beneficiary of the land trust and the answer was well I've done it for asset protection purposes I want to make sure that if something happens that is you know this trust is going to own a piece of property here and and if somebody sues the trust I want to ensure that if the trust gets sued if I'm the member in this LLC that they can't come after me personally that the the lawsuit hits the trust it goes to the LLC and I have asset protection come on Clint it's basic 101 that's why I did it well I understand the rationale here as probably you do as well but the thing is is that we missed a crucial step in setting it up this way because the question I asked him is I said who owns the property right now that you intend to put into this trust he said well I own the property I said ah well then this is where we need to change what you've done here when you set up a land trust where you own the property we're not going to make your LLC the initial beneficiary of that trust okay what we're going to do is we're going to name you as the property owner as the initial beneficiary and the reason we're doing this is because when you transfer title into that trust you know you file a deed many times the assessor's office will then ask you know is this an exempt transfer is it going to result in a taxable event well if the grantor which is the person who currently owns a property which is you is also not the beneficiary of the trust then the answer is it could result in a taxable event so you do not want to name that LLC initially as your trust beneficiary you want to be the beneficiary of the trust or if it's you and your spouse then the two of you would be listed as the beneficiaries of this trust because you're both both the gr tours currently on the property now once this is set up and you have your trust drafted and you've deed the property into the trust name then what you're going to do is you will have your LLC that you've set up over here now this LLC can be filed in the state where the property is located it could be set up in say Wyoming it really doesn't matter where you create this LLC because the LLC does not hold the property the only time that's going to come into uh into play where it's going to be important is when we're dealing with tenants so watch the segment where I discuss what to do with tenants and land trust that's where we're going to get into this in more detail but for for purposes of this video here let's assume that this property here is located in tenness uh Tennessee then we'll make this a Tennessee LLC so they're in the same state now what you'll do is you're the initial beneficiary of your trust you're going to assign all right assign your interest to the limited liability company you'll assign that over and again I got a segment on that you can watch as well on how to assign the interest in so you're going to sign the interest over to your limited liability company so you're no longer going to be listed as that beneficiary for purposes of this trust it's going to be the LLC and you're going to be the member in that limited liability company so that's how it flows so now something happens again we're back to that same point they attack the trust and then the liability flows into the LLC and you're you're not going to be held personally responsible for that so it's key that when you create these documents that you you do it in an orderly fashion and that you set it up in the way in which I explained so that we don't have any Loose Ends out there you give somebody an angle to come in and pierce your asset protection structure because you didn't follow the proper procedures so when it comes to aiming a beneficiary just use these simple rules if you're the gror that is you own the property then you're going to be the initial beneficiary of your trust if I own property in an LLC or Corporation well then that entity would be the initial beneficiary of that trust so all you got to figure out is who is the owner that is your trust beneficiary my name's Clint counes with Anderson business advisors

Channel: Clint Coons Esq. | Real Estate Asset Protection

Views: 39,964

Keywords: beneficiary, land trust, llc, real estate

Id: 37YMkbMBrLI

Length: 4min 42sec (282 seconds)

Published: Mon Mar 20 2017