A personal property Trust is a way for a property holder to account for all mortgages and liquid assets (cars, boats, furniture, etc.) and assign them to a trustee who acts as a title-holder. In other words, it’s a way to keep your name off of property that you own, including the deeds and mortgages. If you want to own property but not have your name appear in a public record regarding that property, this is the way to go. The nice thing about this is that there are no additional penalties in the way of gift or income tax concerning this Trust, and according to www.wikipedia.org, it acts just like any other revocable, living Trust. Still, many investors have questions concerning what it is and whether it is right for them. Listed below are ten tips for personal investors who are considering a personal property Trust. A word of caution: These techniques were gathered from various legal websites and personal experience. I STRONLGY suggest you consult a lawyer before making any decision concerning a personal property Trust.
1. It keeps you anonymous
I mentioned above that the personal property Trust keeps your name off of public records. What if you are looking to purchase properties in the future and potential sellers and investors are watching the property in question? It is the trustee, and not you, that they deal with. Years ago in Elkhart, Indiana there were stories that Conrail did this when buying a neighborhood for a new construction project. By the time the sellers knew who the buyer was, it was too late to hike the prices up.
2. It stalls creditors
When dealing with creditors, they will do everything they can to get what is owed. Using a personal property Trust hides our ownership (to a point) and lets the folks think your trustee is the option holder, and not you.
3. It works with mortgages
A personal property Trust can include a mortgage on a home and make the property appear less valuable, however, if you don’t show that there is consideration to the mortgage you could be facing fraudulent document charges.
4. It protects your privacy
If you have any vehicle registered through the DMV, anyone can find your address. If the property is through a Trust, your name is kept off the item and your address remains hidden.
5. LLC Status
This one is kind of cool. People form an LLC for their corporation to protect them in the event of lawsuits, but this also means that your information once again becomes a matter of public record. You can list your share in the company as an asset, which makes it an item eligible for a Trust. Therefore, the Trust and not you is on the LLC. You just have to list yourself as the beneficiary of the Trust.
6. Know your trustee
You can list yourself out as a trustee in many cases, but that sometimes defeats the purpose of the Trust. Make sure that if you do get a Trust, your assets are in reliable hands.
7. Stack your Trusts
What if you have a situation where public disclosure of the grantor in a land Trust is required? Land Trusts can stack with personal property Trusts (the land is your property after all). This way, if you have to list out any personal information, you can put the Trust down instead of your name.
8. When should I consider a Trust?
Consider a Trust if you want to protect your privacy. Also, if you are with a group of investors it would not hurt to act in the name of a Trust to get a better deal. For example, I would consider this when buying large amounts of low-income property from private holders to perform a quick turnaround.
9. When Should I Pass On A Trust?
If your property is in no danger, or you are not looking to make a major financial move in the immediate future, then a Trust may not serve that much of a purpose. Also, if remaining anonymous isn’t a concern, a Trust might be excessive.
10. Can anyone get a Trust?
As long as there is property to protect, anyone can get a Trust. Again, make sure that you consult a lawyer and that a Trust is financially beneficial to you. Also, it never hurts to associate yourself with others who are in a similar situation in terms of owning a land Trust. Organizations exist all over the country to help and protect investors just like you, and to provide consultation on key issues.
Information and descriptions for this article were taken in part from www.wikipedia.org, www.reiclub.com/ and www.landtrustalliance.org.
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