Who Should You Trust? – Advantages & Disadvantages of Engaging in …
If you have done any research in reference to real estate lately, chances are that you have probably come across the information on land trust agreements. An agreement of this kind is comparatively new and often underestimated. Opting to close a deal by the incorporation of a land trust agreement is a simple and inexpensive way of handing the ownership of real estate, especially if who holds the actual title of the character is an issue for the buyer.
A land trust agreement is basically an arrangement between two parties where the recorded title of the real estate character is held by a trustee instead of the actual buyer. Creating a land trust agreement involves signing a short term trust agreement at the time real estate is purchased that is made between the beneficiary/owner and the trustee/title holder. The beneficiary directs any actions taken in relation to the character and the trustee abides. The beneficiary, which is the buyer, retains the use and operation of the character, and any income that it generates. The trustee, however, which can be an attorney, law firm, bank, trust company, or other investor holds title and acts according to the direction of the new owner.
As to who can take part in such an agreement, there really are not any set limitations. Anyone who is willing and able to go into into a contract with an investor, whether as a trustee or a beneficiary, can do so. Also, the agreement does not have to be specifically between two individuals. An agreement can be with business associates, syndicates, as a joint venture or partnership, or with other groups that have a general interest in getting involved in a possible deal.
So you may be wondering, just what is in it for the buyer and what does he/she have to gain if the title of the character is not under his/her name, upon sealing the deal. This is where this kind of an agreement gets creative. already though, the title of the home or character if officially under the name of the trustee, the buyer as the beneficiary is the actual owner of the physical character. As its owner, all rights, conveniences, responsibilities, and duties that are attached to claiming ownership of the character are unprotected to the beneficiary or advantageous owner. already though his/her interest in the character is typically not disclosed, assumption of all limitations and accountability for all occurrences that may be later to are stated and confirmed within the agreement.
So, in a nutshell, the beneficiary owns the character and acts as the record title owner but it is the trustee who officially holds the title. The beneficiary buys and claims ownership of personal character and maintains the complete management and control of it. Being the beneficiary also offers the advantage of not having to deal with any legal responsibilities, characteristics, and proceeds involved with the character.
The responsibilities of the trustee, in addition to lending their name to the title of the character, include dealing with all legal obligations, such as the execution of deeds and mortgages. But already in this area, the trustee is not left to his/her own devices. He/she usually must act under the direction and authority of the beneficiary, who is ultimately in control of the real estate.
Advantages to becoming the beneficiary of a piece of real estate are many. For example, because, they control the ownership of the character, beneficiaries have the right to the selling, assigning, or pledging of their interest in the character at their discretion. Also, if this is what they decide to do, these processes tend to be much easier to do than the more traditional and traditional methods, mostly because they officially control the ownership of the character. Deeds are typically not needed to move interest in the character and it is often done by assignment.
Another advantage is anonymity. A land trust agreement can be viewed as kind of a like a means that allows someone to keep up title to real estate that is exempt from probate. As the ownership is not officially disclosed to the public, the owner is protected. At times the advantageous ownership may fall under legal scrutiny, but in general, basic identification information of the beneficiary is not typically questioned.
This kind of an agreement is very attractive to those who wish to protect their privacy and identity in relation to the real estate in question. Since actual ownership of character is disguised, it is an optimal agreement for real estate investors that may be targets of litigation may have been sued in the past and wish to avoid a similar scenario from occurring in the future.
series of ownership is in addition another advantage. On behalf of the beneficiary, who receives ownership of the character, financial position is not compromised if any negative circumstances were to arise. There is also a greater sense of security for benefactors involved. Partners or co-benefactors also do not have the ability to opt out of the agreement, but ownership of the character can be transferred. Another positive aspect is that there are no negative tax consequences involved if the character ownership is transferred into a revocable trust because the owner, or grantor, controls the character where tax purposes are concerned.
The owner is also protected on another level, especially if there is more than one beneficiary that can claim and control ownership. The ease of multiple ownership is already more magnified, considering that all necessary documents must be signed, notarized, and recorded by the trustee and not the beneficiaries involved, however many of them there are.
Also, in such situations where death, divorce, disability, or other legal judgments and litigations may become an issue that include one of the owners and not the other, a land trust agreement protects all owners individually. For example, a possible judgment or lien that could be placed on the financial holdings of one owner of a specific character, the financial situations of other owner(s) involved would not consequently be affected.
In addition, because the title is nevertheless in the name of the trustee, the title of the character is not affected already if beneficiaries are negatively dealing with claims and creditors. however, already though claims against benefactors do not directly affect the ownership of the character, the income generated from the character that belong to the benefactor does have the possible to be affected by any legal proceedings that may occur.
Another possible negative situation that may occur is the possibility that a creditor may force a beneficiary into signing over his/her advantageous interest as a resolution to a legal matter. For such reasons as the before mentioned, it is very important to make sure that both irrevocable domestic trusts and foreign asset protection trusts that are prepared include sections that ensure that the rights of all beneficiaries involved are not compromised and a creditor can not reach the strength of ownership for the real estate character in question.
As with any other agreement, it is imperative to probe the rules and regulations that are applicable within each state. Although land trust agreements are legal and commonly used in states such as Illinois and Florida, they are illegal in others. There may also be laws that could be associated that may require the administration of the land trust agreements are executed by commercial trustees, such as edges or trust companies. Seeking the legal counsel of an attorney regarding all necessary documents and proceedings is also highly advisable.