Posted by Dave W. - VA on August 28, 2004 at 24:59:33:
Recently below there was a post addressed specifically to you titled “New Step for Land Trust Title Transfers?” I help run a CRE club in VA and the question/proposal actually became the subject of our most recent meeting and virtually everyone affected decided to postpone transfers into land trusts until we read what your response was going to be.
The author of the post clearly was not asking for legal advice pertaining to a specific incident, but rather asking a general question that may forever impact how title should best be transferred from an individual to a land trust. My guess is that you missed it. In any case, I pasted it below in the hopes that you can take a moment to respond. Thanks!
This question for Bill pertains to anyone who may be contemplating the transfer of property title from an individual to a land trust with a limited partnership as the beneficiary.
The US 5th Circuit stuck down a lower court ruling (Kimball vs. USA May 04) and basically ruled that transfer of assets to a limited partnership in return for partnership shares is a bona fide sale because the shares do in fact count as “adequate and full consideration”. With the LP once again withstanding assault (in this case, from the IRS), wouldn’t it be prudent to transfer title to a property from the current individual FIRST to the LP, and THEN to a land trust? My thinking is that if a judge (especially one in CA) rules the trust is a sham or disregards it in some manner, that the property ownership would then revert back to the LP and the creditor has to sue the LP, not the owner. Of course, if the trust is ruled “legit” then the credit has to sue the LP as the beneficiary of the trust. Either way, they have to deal with the LP. Your thoughts??