The first time I used trust in the land was the situation I needed to save my dealings. Normally, I inverted under contract and never took a title. However, I had to withdraw a strict deadline in a censored contract and take it in cash. I called another wholesaler that I believe my judgment, and he was betting on that fund. He just said that we needed trust in the land. Why did I ask him, but his answer was fairly simple. He answered. "For my protection, just in case you hit the bus"
What we are not talking about is cloaking technology used for some malicious purpose or the player is to switch the switch in the middle of a transaction. What we are debating is basically a joint venture agreement between you and real estate investors and financing partners. (In order not to cause confusion, I use the word "real estate investor" as a meaning to a person passing by.
Land trust agreements created and sold at the time of purchase are buyers and real estate sellers. You and your financing partner are the parties or interests listed in the trust that retains business interests and in our case is the personal property and the resulting benefits. The contribution experience and / or knowledge of one party and the funds of the other party. Both hold shares as beneficiaries. You act as a trustee / beneficiary, and the partner acts as an investor / beneficiary.
Land trust is a wild misunderstood animal of real estate investment circle. One reason is that it exists in many kinds and variations and performs various functions for various purposes. It should not be confused with real estate investment trusts, land conservation trusts, REITs (Real Estate Investment Trusts) which are simply real estate mutual funds.
Again, we are discussing the contractual agreement for the Illinois Land Trust (sometimes referred to as naked trust or pure trust) that has a title and is one of the closest relatives. Land trust is basically a revocable, or gift trust. In certain states, certain laws and regulations are applied, but in most other countries it is allowed to be used as revocable or living trust under the law. And this is only the tip of the iceberg that I can not understand.
For our purposes, we do not have to suffer from various complexities. For us, they are simple agreements, describing partnerships and titles. Using land trusts is the easiest and most efficient way to buy and sell property when multiple parties are engaged. They have the same effect as a general partnership, but do not restrict personal responsibility, or do not have a partnership as a specific entity in IRS, like a limited liability partnership. We will act in the same way as a joint venture, but we will restrict the responsibilities of the joint venture.
Some "creative" investors accidentally believe that trusts can escape the IRS. The IRS expects its shares until it completely abolishes the IRS or at least substantially limits its excess control. Land trusts do not mitigate all tax effects, but can legally circumvent some awkward taxation requirements.
Since land trusts are considered pass-through entities or ignored entities, the real estate held in the trust is treated as owned directly by the beneficiary. You do not need a trust to submit a tax return. All income and expenses are reported separately by the Compensation Committee based on their respective income tax returns. Ironically the IRS and its own complex tax codes make this possible.
Simply put, land trust represents partnerships, provides protection and enables anonymity. Investor's name will not be disclosed. Income reports are the sole responsibility of each beneficiary. Judgment or mortgage on personal name is not a mortgage for trust property. Also, if a partner divorces or hits a bus, you can easily continue the project without legal entanglement.
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