Destroying the Land Trust Privacy Shield
Land Trust Privacy Shield In Question.
I have been using land trust privacy concept for many years and aside from a few closing agents not understanding them they have been flawless for keeping me anonymous in the public record. In addition, they can limit the beneficiary’s liability to a specific property versus all the assets of an individual. Some attorneys will disagree but I can find as many who will agree – so you draw your own conclusion.
Why would you want to be anonymous in the public record? In spite of what some attorneys tell you, I know they take cases based on the defendant’s ability to pay if they get a judgment that needs to be collected as well as the plaintiff’s ability to pay whether the case is won or lost. The easiest way to find out is a public records search for the proposed defendant’s and plaintiff’s assets – if no assets than why take the case?
A land trust is a simple document that has been in existence since the Roman times so it’s not a new invention. It is a “pass-through” entity so the IRS doesn’t issue a tax ID number unless they don’t understand what you are asking for. Since you aren’t getting a tax ID, you can’t open a bank account.
The main problem we encounter in real estate closings is an uninformed closing agent or attorney who wants to issue the proceeds to the Trustee of the trust – who doesn’t have a bank account to deposit the check or wire funds into. The number of closing agents who present us with this problem is likely less than 1/10 of 1% of our closings. This stubborn refusal to properly issue the proceeds of a sale is in spite of the Trustee giving the closing agent an “Authorization to Pay Proceeds” directly to the Beneficiaries – who will be paying the income taxes on the deal – NOT the trust.
Why is this important? As with most things in life there are always a few people who abuse the system. In some cases investors have illegally used land trust privacy to avoid paying for document fees, transfer taxes, hide assets in a divorce proceeding or bankruptcy and likely even to avoid paying income taxes. This is because the beneficial interest of a land trust can be transferred in minutes and there is no notification in the public record of the transfer – unless the transferee or transferor voluntarily does it.
For some years TSA has had a “No Purchase List” that screens people suspected or convicted of money laundering and it’s used quietly by every closing agent. But recently the US Dept. of Treasury – Financial Crimes Enforcement Network (FinCEN) has taken notice of large financial cash purchases that may have been done for the purpose of laundering money. Starting in March large cash transactions will be individually scrutinized for the source of funds and distribution of the proceeds of the sales.
I personally think that even more should be done to seek out the people who are avoiding paying taxes that law-abiding citizens wind up paying. I’m not on a soap box here but hurray for law enforcement and the next step should be land trust privacy disclosure requirements. Let’s face it; if you have something to hide for the regulatory agencies, you are most likely violating the law.
Land trust privacy use is just another benefit of the real estate mentor program training that we provide to all our mentor students. As a real estate mentor, we look out for your interests and teach every mentoring student what it takes to succeed.
To your limitless success,
Real Estate Mentor Program Founder