Tuesday, February 16, 2016

Real Investors Know How To Protect Their Assets


Hello Fellow Real Estate Entrepreneurs,

We will be having an enlightening meeting this week with special guest speaker, Mike Pendleton (in the photo on the left) of the company Edward Jones. Mike is coming out to our group to teach us the benefits of holding your property in a trust.

Expert investors know and understand how to protect their assets from dirty thieves who want to strip you of everything you have worked for which can include anyone from tenants to local, state and even the federal government. Our culture has changed for the bad and we currently live in a litigious society.  The good old days where you could trust people are long gone.

Here are some of the benefits of holding your assets in a trust that we will talk about with Mike if you ask the right questions.

1. Trusts allow you to maintain your privacy as your property will be listed online as being owned by the trust. If you have several trusts it prevents people from looking up to see how much you own to see if you are worth a good lawsuit or two while trying to strip you of your assets.

2. Protection from claims against you personally. The city likes to jump to suing a landlord at any opportunity they can. Often they won’t wait for long after sending you a notice before putting you in court. If your property is in a trust or an LLC than they have to take that trust or LLC to court. Not you. They will call you in to come to represent the trust or LLC if you are the registered agent or trustee of the trust. However any charges that there may be will go against the trust or LLC, not against you personally.

If they attack you personally as a result of the property being in your personal name, and you don’t immediately pay them, the State will suspend your drivers license. That only happens to people who own property in their name.

3. You are protected form liens. If a tenant or anyone else wants to sue for some reason pertaining to that asset, management of that asset, etc, they have to sue the trust or LLC itself that they were doing business with. If there are any liens or judgments against the property they are against the property itself. It does not transfer over to being against you personally. As long as you didn’t break the law. I’t also works the other way around. If you get liens against yourself for something, it can not transfer over to a lien on the property. UNLESS that property is in your name. In that case the lien on you will become a lien on the property.

4. There is also a future limitation to title claims. If down the road someone wants to sue who signed the warrantee deed on the property. If it was the trust or LLC that signed for the property, they will have to sue that trust or LLC. However lets say that that trust or LLC already resold the property and it has no assets in it’s name. Any lien on a trust or LLC that has no assets is a useless lien that will never be collected.

5. Prevention of HOA’s from going after you personally if you title the property in a trust or LLC. This limits them to the property as being the sole recourse for home owners association debts.

6. Trusts make contracts assignable.  HUDs and REO’s often have requirements that you can not assign your contract. If you buy it in a trust you can assign the beneficiary of that trust to the person you are selling the property to which gets around all kinds of seasoning issues as well as the prevention of wholesalers wholesaling property off the MLS.

7. Trusts can make non assumable loans, assumable. Investors I know will have the seller of a property put it in a trust. From what I understand the law requires banks to allow a person to put their property in a trust that’s owned by them for their own personal protection or probate planning purposes. Then I see they assign the beneficiary of that trust to the buyer.

These little weasely things aren’t something I have ever done as they are more often used by people with credit problems etc who are trying to purchase property. But they are little tricks I have been told over the years by high level hustlers. I personally know people that have millions of dollars worth of judgements against them and they continue to do business by using trusts.

8. Trusts are excellent for avoiding probate court when you or your family members die. There is no reason for probate to decide who owns what when one person passes away because they are already listed as beneficiaries of the trust. That has already been decided. And you can maintain full control of that trust for the rest of your life until you die. There are some tax benefits here as well that I’m sure that Mike will talk to us about.

This was just a small handful of the benefits of owning property in a trust or LLC.  That’s just what was off the top of my head. There are many benefits you get from Trusts that you don’t get from LLC’s and vice versa.

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