A quick word from JP Moses, Director of Awesome…
Here at Mogul, we are super pumped to introduce our newest Faculty Advisor Randy Hughes, aka Mr. Land Trust.
Randy knows all there is to know about using Land Trusts the right way to protect your assets, and how to become more private with your personal life through the creative, 100% legal and ethical use of Land Trusts.
We did a terrific live training call with Mr. Land Trust recently, which you’ve just gotta check out. He shared with us the dos and don’ts for Land Trusts and answered tons of great questions. Go listen!
Randy has purchased more than 200 houses – single family homes are his ideal investment. And using his Land Trust expertise, he’s written loads of content for national real estate publications, published several Privacy and Asset Protection books, and been a licensed Continuing Education Instructor for the Illinois Association of Realtors for more than 20 years. Randy even teaches land trust law and administration to attorneys and conducts seminars throughout the United States.
So, yeah, when we say expert, we mean it! Read on, friends, and enjoy.
Maintaining your Privacy
One of the many benefits to putting your property into a Land Trust is the privacy aspect…
In other words, you can control property through the Trust without your name showing up in the chain-of-title (at the court house). Many people, for a number of reasons, do not want their business known or their activities tracked. You are less of a target for a lawsuit if you stay out of the "Recorders" office publications.
So, how effective are Land Trusts at keeping their beneficiaries confidential?
The key is the Trustee.
First, if you are trying to sue a Land Trust you must first serve the Trustee. This may be difficult to do if your Trustee is out-of-state and has a last name of "Smith" (this is why we teach you to use out-of-state Trustees, with a different last name than yours and ONLY USE A P.O. BOX ADDRESS!).
Just Like an Episode of Law & Order - Kinda
Let us assume for illustration purposes that you find the trustee (a big assumption) and get him served. This means that you have initiated a lawsuit (hired an attorney) and paid to have the Trustee tracked down and served. These are big assumptions as the legal expenses would be hefty and you would probably have to hire your attorney on a contingency fee basis (think large...up front legal fees)…
Attorneys are not stupid. They know there is a difference between winning and getting paid. Therefore, without a clear to payment of their legal fees, they will insist upon advanced payment of their fees.
For the sake of argument, the assumptions above will lead the Plaintiff and his/her lawyer to interrogatories…
These are legal procedures that follow the filing of a lawsuit and involve questioning of all defendants in the lawsuit. The purpose of the interrogatories is to find out information that can be used against the defendant in the lawsuit. In this case, the purpose of the questioning would be to find out the name of the beneficiary of the Land Trust (so the lawsuit can be amended to include the beneficiary).
If the Trustee refuses to "give up" the name of the beneficiary, the Plaintiff's attorney would have to file a motion with the court to force the Trustee to divulge the name of the beneficiary based upon the Trustee's failure to comply with the discovery request (the interrogatory).
The judge hearing the case would then have to rule on the motion and decide if the Trustee has the right to remain quiet. The judge will decide this motion based upon the need for privacy (the right to privacy) of the beneficiary vs. the need to know who the beneficiary is to resolve the case.
As you can see, all the while this legal wrangling is taking place, the plaintiff is spending legal fees. If you have set up your Land Trust agreement and designated your Trustee properly, it will be a long time (and a lot of legal fees later) before the Plaintiff's attorney would get to the point of asking the Trustee under oath, "Who is the Beneficiary?"
Remember, YOU HAVE TO FIND THE TRUSTEE TO SERVE HIM/HER/IT!
Gimme me a D for Defense
And we have not even scratched the surface of other defensive moves the Beneficiary could have made...
For example, the Beneficiary of the Land Trust could be an "Agent for an undisclosed beneficiary." This means that once you force the Trustee to tell you who the beneficiary is, you will just find an "agent" for the ultimate Beneficiary.
Or, the Beneficiary could be the Trustee of another Trust. Or, the beneficiary may have changed from the original beneficiary to a new beneficiary (oversees). This is a short list of the defensive possibilities.
The point here is that when you hear on the street that Land Trusts are old, outdated and not used anymore or that Land Trusts have no benefits, you should question the knowledge and experience of who is telling you this. There is a lot of misinformation "out there" about Land Trusts.
Learn all you can...it will set you apart from the crowd.
Checking County Records
So now that we’ve covered how to discover the true Beneficiary of a Land Trust, let’s talk about how sometimes, it is as simple as checking the county records…
Case in point – I was cruising a neighborhood that I wanted to buy property in. One property caught my eye so I wrote the address down and went back to my office. Once on my computer, I was able to determine through my county's website that the owner of the property was a Trustee of a Land Trust.
This would have normally slowed me down, but the data sheet that I was looking at further indicated that the tax bill was being mailed to "Mrs. Sally Seller." In other words, after going to the trouble of putting the property into a Land Trust the original owner listed her own name and address for mailing of the tax bill. Doh!
I then looked in the phone book for Sally Seller's phone number. Since no number was listed, I jumped in my car and drove over to her house (remember, her home address...not the address of the property I was interested in...was listed on the county's data card) and knocked on her door…
Sally came to the door and I asked her, "Do you own the property over on Alms Street?" Sally said "yes," and at that point our negotiations began.
The obvious lessons to be learned here:
1. When indicating where to mail the real estate tax bill, put your Trustee's name and your P.O. Box number.
2. Some practitioners advise their clients when setting up Land Trusts (and some other kinds of Trusts) to use themselves as Trustee. This is obviously a very bad idea and defeats the primary purpose of a Trust...privacy of ownership!
3. If someone comes to your door and asks you if you are the beneficiary of a Trust, tell them you have no idea what they are talking about!
Learn as much as you can wrap your brain around about Land Trusts. It will make your REI dealings so much smoother.
Remember, privacy is king in Land Trusts, never ever give that up. Play dumb if you have to.
Wanna know more? If you are interested in how the law treats this subject in the state of Illinois, go to the Illinois Statutes (735 ILCS 5/2-616 (e)).