All investors will certainly hear about the use of trusts in their real estate business. Most investors may encounter these trusts in some way. A few will use them regularly. The fact is, there are a number of different kinds of trust used both in real estate and our personal lives. This set of 4 articles will highlight the types of trusts most commonly encountered by real estate investors. Here we generally cover the 3 trusts used in REI, and then we’ll follow up with an article on each one.
The first one is most commonly called a “land” trust. This is not super accurate! Only a few states actually have true land trusts as they are very specific types of trusts authorized by the state. For the rest of us, we use property trusts, real estate trusts, holding trusts or the like. These are simple revocable (changeable) trusts designed to simply own real estate—either by contract or title. These trusts are used for privacy purposes and to facilitate many REI transactions.
The second trust is the standard family living trust. This is a much larger and complicated trust as it’s designed to define, control and allocate your assets after you pass away. You can think of this trust as a traffic copy, directing things when you can’t. You should work with an asset protection attorney to create your family trust because this should be part of your overall asset protection plan and work with your other protection vehicles, like LLCs.
The third trust is the asset protection trust. This is much rarer than the other two. It’s a highly protective irrevocable trust. The irrevocable part is the key. That means it can’t be easily changed or modified. This is where the protection comes from. The purpose of this trust is to protect assets for extended periods of time. Investors with large estates or a number of assets can greatly benefit from this trust.
You can watch a video on the “3 Trusts used in Real Estate” on my website for more information. Also, join me next week when I will describe the real estate trust. Be sure to read the next article.
Jeffrey S. Breglio, Esq.
Breglio Law Office and REI Mastery U
www.reimasteryu.com
jeff@bregliolaw.com
(801) 560-2180