Posted by LeasePurchase on December 26, 2006 at 22:33:32:
“I’d like to know what the benefit is for putting my
property in a Trust”.
There is only one benefit of putting you property in a Trust and that’s to avoid Probate.
“What is a Trust”?
A Living Entity that you create to avoid Probate. Your assets are held in Trust of which you are most likely a beneficiary of and Trustee for.
“Can I do it just before refinancing”?
Yes, but you must remove it from Trust to refinance and then revest it to Trust after.
My guess here is that you may be referring to a Real Estate or Title Holding Land Trust. If that is the case then, even tho a Title Holding Land Trust is also a Living Trust, it is created a little differently and if properly contructed has in effect what amounts to be some level of asset protection.
In a Title Holding Land Trust the title is vested or owned by the Trustee. And NO, you can’t be it. You must remain one of the Trusts Beneficiaries only.
In a Revocable Living Family type Trust (referred to above) the Trust owns the property and you are its Trustee and a Beneficiary. It is both Trustee and Beneficiary Directed and has no asset protection value at all.
In a Properly formed Title Holding Land Trust, the Trustee owns the property but has absolutely NO Power of Direction or Power of Sale. It is an expressly Beneficiary Directed Trust. Only the Beneficiaries, unanimously have the power to direct the Trustee. The Trustee’s sole duty is to hold title for the benefit of it’s members.
Because the Trustee actually holds Bare, Equitable and Legal Title and serves no other purpose, it enjoys the avoidance of risk and liability. In order to sue a valid Trustee it must be deposed. But that’s the point, if valid it cannot be deposed.
So it wouldn’t matter even if someone sued you and knew you were a beneficiary of the Trust, they still couldn’t depose the Trustee and force the sale of the property to satisfy a Judgement Lien, including by the IRS. This I know from personal experience.
The key words here are Valid and Proper. There are both State and Federal guidelines that must be followed or the Trust can be deemed invalid and the Trustee deposed.
I recently challanged a dozen Real Estate and Estate Planning Attorneys to create a vaild Title Holding Land Trust. Not one of them could. And one of them had been doing what he called Land Trusts for over 10 years.