Anticipated RE Bail Out in 2008

[Debbie]

I had completely forgotten about zero capital gains tax on the sale of RE held by individuals. I must admit that I do not fully understand the "why" plan of zero capital gains.

I noticed it from this link: http://www.magicbullets.com/forum/showthread.php?t=1494 which triggered my question. This is one of Aldo's comments that I find it interesting: "Second (this is only my opinion - so far) is that the RE market will take another hit in 2008. For that year there will be zip, zero, nada capital gains tax on the sale of RE held by individuals. (It will not apply to properites held in entities.) There will be roughly a kazillion baby-boomers retiring at that very time who will want to bail out of RE due to that tax advantage while recognizing that they no longer wish to dealk with tenants. On top of that, I see a lot of investors wanting to bail out now but will defer to 2008 for the tax break. I anticipate a buyer's market like this country has never seen at a time when the RE market hasn't had a chance to recover from the burst of the RE bubble."

So gang, would you explain it to me the "why" and what is anticipated what would happen.
Also, what would happen after 2008?

Debbie

[mike_mn]

If my memory serves me, back in 1997, congress passed a law to eliminate capital gains tax completely over a 10 yr period, stepping the rate down each year. My opinioin is that this was due to lobbying pressures from all sides due to the changes made to passive loss rules back in ??1987 and/or 1992??I believe. The problem is that after the 10th year, the law reverts back to the pre 1997 tax amount with I think is a max of 40%??

I think the idea was to get congress to make some kind of perminant solution to the capital gains issue before the 10yr period is up. I have a hard time believeing lobbiests in DC are willing to allow the law to revert back...but anything could happen.

I am sure somebody else will chime in with better than my faint recollection from a reading/research on the subject...

EDIT: Oops...I am thinking of the estate tax It was 1999 or 2000 stepped down til 2010...nevermind. I will look up info on the capital gains issue...2010 will be a good year for rich folks to die though...can pass on their assets with no double tax...or tax at all

[mike_mn]

http://www.bankrate.com/brm/itax/tips/20010305a.asp

As for your question of why...it all comes down to lobbying...

The folks that have the most money shoved into lobbying congress win...generally.

There have been major tax reforms in 1986, 1992, 1997 and 2003. Depends on your idea of majjor, but every year tax reform happens...why...Sometimes to stimulate the economy, sometimes to slow it down...

[Aldo]

Does the fambly realize that most federal lawmakers, by some strange coincidence, happen to own investment real estate? Being fair-minded, I'm sure that fact has no effect on their legislative decisions.

[landtrustwizard]

Aldo,

That is the point I often make. Of course they do and the majority of them want that kept private. That is why land trusts are exempt from the DOSC and protected by Federal law. Does anyone really think that politicians and bankers are EVER going to weaken the protections that land trusts provide and take away the privacy and asset protection they enjoy. Not a chance! When banks fought consumer groups in the late 1970's and the early 1980's to get the Garn-St. Germain Act of 1982 passed by Congress, it gave them the right to implement the Due on Sale Clause whenever someone transferred title without notification. Of course, land trusts were exempted because their wealthiest depositors and the politicians needed to approve the bill, use them. Money runs this country, and always will.

[Salty Dog]

Does the zero capital gains in 2008 apply to all tax brackets?

[InvestorJoe]

That is why land trusts are exempt from the DOSC and protected by Federal law.
Abolutely not true.

If you put it in a trust and then transfer any part of the beneficial interest and the lender finds out wants to foreclose Garn-St.Germain will not apply.

You comment is like saying that it is legal to run a redlight with a camera if you have obscured your license plate. It might make it harder to find and prosecute you, but running the light was still illegal.

Please cite your source for trusts being exempt from a DOSC.

[InvestorJoe]

Does the zero capital gains in 2008 apply to all tax brackets?

No, only the 5% level goes to zero for 2008. The 15% rate is unchanged.

In 2009 it all reverts back to the pre-2003 law.

[mike_mn]

Abolutely not true.

If you put it in a trust and then transfer any part of the beneficial interest and the lender finds out wants to foreclose Garn-St.Germain will not apply.

You comment is like saying that it is legal to run a redlight with a camera if you have obscured your license plate. It might make it harder to find and prosecute you, but running the light was still illegal.

Please cite your source for trusts being exempt from a DOSC.
Title 12 of Code of Federal Regulations states that you must remain "the" beneficiary.

Garn St. Germain Act exemption 8 states you must remain "a" beneficiary.

Since The code of federal regulations is not Law, but a court reference and Garn is an enacted Law...the thought is that transferring a portion of beneficial interest is not subject to a due on sale clause. This has yet to be litigated...but has been threatened. Leads one to believe a lender is not confident they would win if they tried.

NARS EHT Trustee's have been contacted by lenders threatening to call the loan due, but no litigation has ever ensued regarding a DOSC violation and a NARS EHT transfer. If you question this, you should contact Thomas Standen at equityholding.org. His company acts as corporate trustee of many of the NARS EHTs and has been contacted by lenders threatening DOSC action. Without further action than threatening contact.

[landtrustwizard]

Joe,

You said, "If you put it in a trust and then transfer any part of the beneficial interest and the lender finds out wants to foreclose Garn-St.Germain will not apply."

That's incorrect, Joe. You can transfer the beneficial interest all you want as long as the seller is and remains a beneficiary. You are transferring an interest in personal property, not real property.

(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property;

Bill Gatten has had three recent cases where a lender tried to invoke the DOSC and his letter advising them that the property had been placed into an Illinois-type title holding trust was all that was necessary to stop the lenders. Countrywide and WAMU were two of them and the third escapes me.

I, personally, have transferred my own property into a land trust several times and notified the lender. I had owner occupied loans and triple net leased the property to a tenant/RB, giving him a beneficiary interest in the trust and enabling him to be considered an owner by the IRS. The last time I did it, a Countrywide loan officer told me I was in violation of the DOSC. I quoted the law and referred him to his legal department. That was it. He called back and told me I was correct.

:SM038:

[InvestorJoe]

Joe,

You said, "If you put it in a trust and then transfer any part of the beneficial interest and the lender finds out wants to foreclose Garn-St.Germain will not apply."

That's incorrect, Joe. You can transfer the beneficial interest all you want as long as the seller is and remains a beneficiary. You are transferring an interest in personal property, not real property.
No, it isn't incorrect. You can't be guaranteed of protection when using a land trust if the rights of occupancy change. This is an unsettled area of the law. It might never be settled, on the other hand, if it is then it is possible that a house of cards built upon trusts used that way could collapse.

(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property;
Yes, now you aren't really going to try to claim that your sellers remain occupants of the property, are you?

Bill Gatten has had three recent cases where a lender tried to invoke the DOSC and his letter advising them that the property had been placed into an Illinois-type title holding trust was all that was necessary to stop the lenders. Countrywide and WAMU were two of them and the third escapes me.

I, personally, have transferred my own property into a land trust several times and notified the lender. I had owner occupied loans and triple net leased the property to a tenant/RB, giving him a beneficiary interest in the trust and enabling him to be considered an owner by the IRS. The last time I did it, a Countrywide loan officer told me I was in violation of the DOSC. I quoted the law and referred him to his legal department. That was it. He called back and told me I was correct.

:SM038:
While I seriously doubt he called you back to tell you that you were on solid legal footing I agree that this is totally unsettled law.

There is an interesting unintended consequence coming from this practice you describe. Title companies are now taking a much harder look at the chain of title once a property has been placed into a trust for the purpose of obscuring a transfer of ownership.

As I said, it may never be settled, then again one of your transactions might just be the case that settles the matter at some time.

[landtrustwizard]

Joe,

The trust does not refer to a transfer of occupancy. The Garn-St. Germain Act specifically allows for the owner to remain a beneficiary of the trust and lease the property to a co-beneficiary.

(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

(4) the granting of a leasehold interest of three years or less not containing an option to purchase;

So, in our case, the Trust itself makes no reference to occupancy and the seller remains an owner of the trust. We are in compliance with the law as written above as I read it. I am not a lawyer, just my interpretation and over 20 years without a single case proving otherwise.

[InvestorJoe]

Joe,

The trust does not refer to a transfer of occupancy. The Garn-St. Germain Act specifically allows for the owner to remain a beneficiary of the trust and lease the property to a co-beneficiary.

(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

(4) the granting of a leasehold interest of three years or less not containing an option to purchase;

So, in our case, the Trust itself makes no reference to occupancy and the seller remains an owner of the trust. We are in compliance with the law as written above as I read it. I am not a lawyer, just my interpretation and over 20 years without a single case proving otherwise.
The wording of the enacting legislation doesn't say "refers" to a change in occupancy, it says, "relates".

But, to each their own.

You mentioned that the IRS recognizes the ownership interest like that somehow validates your concept. It doesn't. I am very familiar with the workings of the IRS, my sister has been an IRS auditor for over 20 years and her husband is one of those dreaded Revenue Agents.

As it relates to a deduction on a tax return for items like interest paid and depreciation, the IRS is mostly concerned that only one entity is claiming the deductible amount than whether the ownership claimed is valid. If it ever got to tax court though the validity of the ownership might be an issue.

However, since your trust use can't force the lender to change who they issue the 1098 to each year, your buyer is at the mercy of the honesty of your seller to refrain from claiming interest and property tax deductions that the lender told the IRS belonged to the seller.

[landtrustwizard]

Re IRC (h) (4) (d) SPECIAL RULES FOR ESTATES AND TRUSTS

The portion of the property owned by the non-resident Beneficiary (Owner) as income property can qualify for the passive tax writeoff (IRC #167) such as depreciation and expenses.

The Lessee (Resident Beneficiary) as an Active Participant deducts the property taxes and mortgage interest.

[InvestorJoe]

There are other problems too.

For example in Arizona, unless your deed lists all of the beneficiaries of the trust it is invalid. See http://www.azleg.state.az.us/FormatDocument.asp?inDoc=/ars/33/00404.htm&Title=33&DocType=ARS


You want also want to see http://keytlaw.net/az/realestate/landtrusts.htm

[landtrustwizard]

Hi Joe,

Land trusts in Arizona:

http://user148333.websitewizard.com/images/image002.gif

Gary

[Debbie]

*AHEM!!!* :mad:

[Aldo]

*AHEM!!!* :mad:

What does that have to do with anything?

[InvestorJoe]

Unlike what the opinion text above portrays, the penalty for not disclosing the beneficiaries is not that any other beneficiary can void the conveyance. This is the text from the enacting legislation.
E. Any conveyance of real property or an interest in real property which does not include the disclosures required by this section with respect to the property so conveyed is voidable by the other party to the conveyance. Any action to void the conveyance shall be commenced within two years after the date of recordation of the document effecting the conveyance.
It can be voided by the seller!

Your opinion text also states the land trusts are functional because they are not excluded. That is all fine and good, but that doesn't mean they afford the protections or benefits desired. That is compounded by there not being any case law in AZ that affords even a fig leaf's amount of cover for that position.

I think we are saying the same thing. It is a totally unsettled area of law. I prefer a bit more certainty in my life.

[Debbie]

What does that have to do with anything?

My way of saying: Let's not get this debate out of hand

[landtrustwizard]

What debate? We are politely discussing our opinions as to the validity of land trusts in AZ. We both agree that there is little law re land trusts despite the fact they have been used since 1891.

It's one thing for the moderators to step in if there are any personal attacks, etc., but Joe and I are offering opinions and there is no reason for Big Brother to intervene. Thanks.

Joe, there is never a reason for the seller to want to invalidate the trust. When I use the trust, the seller's full equity is protected and he/she does not transfer title to the property itself until his mtg has been paid off and he has received all the funds due.

As to the trust providing the benefits desired, the conversion to personal property is the benefit I seek. That enables me to make items such as property tax and mtg interest writeoffs available to my tenant in exchange for higher rents. I'm not so much concerned with the privacy issue as my deals always have two unrelated co-beneficiaries and the protection that provides. Have a good one.

:SM065: :SM065: :SM065: :SM065:

[InvestorJoe]

Joe, there is never a reason for the seller to want to invalidate the trust. When I use the trust, the seller's full equity is protected and he/she does not transfer title to the property itself until his mtg has been paid off and he has received all the funds due.
The title to the property has to be transfered to the trust to get any benefits from the trust.

Also, the enacting legislation doesn't say the seller could invalidate the trust, it says they could invalidate the conveyance. Meaning the seller could void the sale up to two years after the title is conveyed to the trust. Now, why might a seller want to do that? Hmmmm, perhaps a regret for selling too low? This is why title companies have heartburn with it.

[landtrustwizard]

Title is not vested in the trust. A land trust is the only inter-vivos trust whereby title is vested in the Trustee, not the trust. It is this Doctrine of Equitable Conversion that converts the property to personal property and provides the benefits I seek.

I asked Bill Gatten about land trusts in AZ and he laughed. He reviewed the attorney's website you provided and just said that this is just another attorney who doesn't understand land trusts. He said when he gets time he'll provide me with a point-by-point rebuttal but did say that NARS has done hundreds of trusts in AZ over the past 15 years with not a single problem.

He was also amused that this attorney used John T Reed as a source. Here is Bill's point-by-point rebuttal to Mr. Reed:

http://site.landtrust.net/sites/339/main/en/PDFArticles/JohnTReed.pdf

Enjoy.

[InvestorJoe]

Title is not vested in the trust. A land trust is the only inter-vivos trust whereby title is vested in the Trustee, not the trust. It is this Doctrine of Equitable Conversion that converts the property to personal property and provides the benefits I seek.
Yep, that is how you place any property into a trust, you convey title to the trustee who acts on behalf of the trust for the benefit of the beneficiaries. And Arizona law will allow the seller or the buyer to void that conveyance up to two years after the property is placed in the trust by conveying title to the trustee on behalf of the trust for the benefit of the beneficiaries.

I asked Bill Gatten about land trusts in AZ and he laughed. He reviewed the attorney's website you provided and just said that this is just another attorney who doesn't understand land trusts. He said when he gets time he'll provide me with a point-by-point rebuttal but did say that NARS has done hundreds of trusts in AZ over the past 15 years with not a single problem.
I'm not saying they haven't been done. I'm saying that the basis for the protections and benefits claimed are unproven.

You will have to forgive my not being plussed by a layman in another state claiming to know more about the legal points than a lawyer who regularly practices in that state.

Where I live almost everyone speeds on the interstates because the laws aren't usually enforced within 10 mph of the posted limits. However, when they are enforced and tickets are issued the claim of being within the "10 mph buffer" has little weight and still results in a fine and points on the driving record.

He was also amused that this attorney used John T Reed as a source. Here is Bill's point-by-point rebuttal to Mr. Reed:

http://site.landtrust.net/sites/339/main/en/PDFArticles/JohnTReed.pdf

Enjoy.
I don't know anything about Mr. Reed other than what I read in the link earlier. My opinion is that he seems to take things very literally and in the real world lines often blur and then resharpen in a different place than where they started.

[landtrustwizard]

Here is Bill Gatten's response to this attorney's so-called expert article:

http://user148333.websitewizard.com/files/unprotected/Land-Trusts-in-AZ---The-Truth-by-Bill-Gatten.pdf

'Nuff said.


:scream:

[IrisPen]

Since I have been lurking for a while on this site trying to decide how to start holding properties, land trusts are something that interested me.

Here is what I am seeing recently, which is confusing.

A real estate attorney talks about land trusts, with what I believe to be some authority on the matter.

Then his article is rebutted by a laymen who apparantley sells some kind of land trust product.

My mind tells me listen to an attorney in these matters, does anyone see it differently or what am I missing?

Iris

[InvestorJoe]

Here is Bill Gatten's response to this attorney's so-called expert article:

http://user148333.websitewizard.com/files/unprotected/Land-Trusts-in-AZ---The-Truth-by-Bill-Gatten.pdf

'Nuff said.


:scream:

Hi, Gary.

I started reading Mr. Gatten's response and I stopped as soon as I reached this I'm just going to refute a few of the points made by “Mr. I'm an attorney and you're not, to I’m way smarter than you.”

He might make good points later in his response but after that it is impossible for me to take him serious. That with the fact that trusts don't interest me in the manner described means that I don't really have any inclination to read the response further.

I use an LLC to buy investment property and for each of my investment properties. It is clean and easy to explain in an audit.

For the record, I do buy sub2 and about 1% of the time the note is called. That isn't a problem because I have financing lined up before taking title.

Good luck and may all your investing be profitable.

[Debbie]

Since I have been lurking for a while on this site trying to decide how to start holding properties, land trusts are something that interested me.

Here is what I am seeing recently, which is confusing.

A real estate attorney talks about land trusts, with what I believe to be some authority on the matter.

Then his article is rebutted by a laymen who apparantley sells some kind of land trust product.

My mind tells me listen to an attorney in these matters, does anyone see it differently or what am I missing?

Iris

Welcome to the Magic Bullets Fambly, Iris!

Yes, it can be very, very confusing.......

Wizard has admitted to having debates/problems with lenders, IRS, attorneys and the likes when it comes to the legal aspects of the use of Land Trust.

Me personally---I'll stick with a much easier time of using the Land Trust that I know is legal all around. In other words, life is too short to get into debate of what the "legal terms really mean" as well as keep my money than to spend money fighting in court, justifying the creative way of using Land Trust.

I'd use Land Trust just to hide my name. It is not an actual Asset Protection but it'd hide my name. Nothing more, nothing less.

[IrisPen]

KaosProperties, thank you for you insight. What you said makes perfect sense and if a person who says they are a land trust consultant has all these problems when explaining a land trust, it must be to complicated for most people to mess with. Personally I don't intend to take these problems on myself or use my attorney and spend money I don't need to spend.

Iris

[landtrustwizard]

Iris,


Although land trusts have been used since 1891, very few attorneys know anything about them. That is a simple fact. The AZ attorney who wrote the article clearly knows little to nothing about land trusts. One need only read his article and Bill's point-by-point rebuttal. I have to laugh when people refer to Bill Gatten as a "layman". Educated at the California Polytechnic State University, San Luis Obispo, Bill's 45 years of work experience are in sales training, real estate investing and institutional banking (former co-owner and founder, Westlake Bancorp; and the former president and CEO of Gatten Financial Services, Inc. and Markay Equipment Leasing, Inc., Thousand Oaks, Ca.

Bill created the Equity Holding Trust system in the 1980's, and ALL of his methods and documents have been reviewed by his legal staff. His system has been used for over 20 years without a SINGLE problem. In fact, his trust program is approved by the California Dept of Real Estate as Continuing Education for Realtors. I defend Bill because I respect him and his philosophy of doing business. Here's some of the layman's material you may find very helpful:

Financing, Hard Money Bad Credit, No Cash -- End Of The World? No Way! (http://www.reiclub.com/articles/bad-credit-no-cash)
Building a Team Choosing An Attorney (http://www.reiclub.com/articles/choosing-an-attorney)
General Real Estate Diary of an Equity Holding Trust Transaction (http://www.reiclub.com/articles/diary-of-deal)
Getting Started Getting Started (http://www.reiclub.com/articles/getting-started-gatten)
Asset Protection The Limited Liability Company...The Time is Now (http://www.reiclub.com/articles/limited-liability-company)
Motivated Sellers The Motivated Seller and the NARS Pactrust (http://www.reiclub.com/articles/motivated-seller-nars-pactrust)
Negotiating The Way To Sell Anything...Especially Yourself (http://www.reiclub.com/articles/sell-anything-yourself)
Getting Started To Be Rich, Simply Stop Doing What Poor Folks Do (http://www.reiclub.com/articles/to-be-rich-stop)
Getting Started Your Plan of Action (http://www.reiclub.com/articles/plan-action)

No Down! No New Loan! (http://www.reiclub.com/authors/gatten/nodownnonewloanrequest.php) - 162 Page Ebook
Picking Up Pre-foreclosures In Good Neighborhoods Without Cash, Credit, or a Bullet-Proof Vest (http://www.reiclub.com/authors/gatten/workshop.pdf)

Kaos said: "Wizard has admitted to having debates/problems with lenders, IRS, attorneys and the likes when it comes to the legal aspects of the use of Land Trust." I HAVE NEVER HAD A SINGLE PROBLEM WITH A LAND TRUST AND HAVE USED THEM MANY TIMES". I ENJOY DEBATING AND EDUCATING, BUT HAVE NEVER HAD A PROBLEM WITH A LENDER, ATTY OR THE IRS WHEN USING MY TRUSTS.

Finally, Kaos said: "I'd use Land Trust just to hide my name. It is not an actual Asset Protection but it'd hide my name. Nothing more, nothing less." FOR A SIMPLE LAND TRUST, THAT IS FINE AND CORRECT WHEN REFERRING TO YOUR OWN RESIDENCE. BUT, TO HOLD PROPERTY, COMBINING A LAND TRUST WITH A TRIPLE NET LEASE AND LEASING TO A CO-BENEFICIARY PROVIDES SOLID ASSET PROTECTION.I wish you the very best of luck. End of topic for me. I'm in the midst of buying a property as my own personal residence -- using a Land Trust of course -- in Arizona.

:SM040:

[IrisPen]

"I defend Bill because I respect him and his philosophy of doing business."
I read these articles written by a layman as I could not find ESQ. behind his name anywhere and now I certainly can understand why you have to defend him. I agree with InvestorJoe's comment about taking him serious.
Iris

[Debbie]

Just to make myself clear on the use of Land Trust----I do not use it for my personal residence. Putting my personal residence can easily affect the 121 exclusion. To those who are not familiar with 121 Exclusion---it's the one that involves $250K for single/$500K married capital gains for selling personal residence.

However, it's a whole different ballgame for rental/investment properties. I do use the Land Trust for rental/investment properties.

With all due respect, Wiz, your statement of: "I have to laugh when people refer to Bill Gatten as a "layman"." I'm glad you're laughing because I seriously doubt anyone is laughing with you.

Let's move away from this subject and get back to what this thread was originally about: RE Bailout in 2008 which has nothing to do with Land Trust.

Thank you.
Debbie

[landtrustwizard]

I'm happy to move on, but you're mistaken about the capital gains exclusion.

[SPIVALAW]

GIVE A MAN A HAMMER AND EVERYTHING LOOKS LIKE A NAIL

Wiz:

Why do you always say attorneys know nothing about trust?
WHo do you think created trust?
Who drafts trust?
WHo litigates trust?

Do you know most attorneys?
How do you know what they know?

True, no doctor knows all medicine and no attorney knows all law.

You may read and talk a lot on trust but you dont know all state laws and you have never litigated a single matter, you have never argued before a jury or a Supreme court.

I have ignored your comments. But just as you honor Bill, I honor my profession.
I have been an attorney since 1984, I have been an invester and broker since 1982.
I have formed, owned and litigated 100s of trust and other entities.
Nothing, I repeat nothing is as fool proof as you claim trust are.

I get it that Bill is your hero.
I get it that you promote trust as a fix all.
Bill writes about LLCs too.

Trust are a tool,
just like LLC, LP, MMLLC, LLLP, C corps, S corps, CRT, Pensions, and other entities...

A trust is one tool.

Your joint ownership with a trust works for you. Great.

Despite what you say, a trust doesnt work for most investor situations like single ownership, commercial, etc.

You have to depend on some individual or company to be your "trustee". Some of us choose not to do that.

Trust arent favorably viewed by all courts in all states.
Trust will NOT stop IRS.
A trial Judge can pierce a trust.

They will not cure colds either.

[IrisPen]

Spivalaw, thank you for putting a land trust in perspective, this helped in my decision should I decide to use one I will listen to an attorney rather than a laymen.

I read the "Choosing An Attorney" article and since I think 99% of Judges are attorneys I am wondering if this paragraph from this article should read this way.

"Ordinarily, when an uninitiated attorney Judge is engaged for the purposes of reviewing Rendering A Decision a land trust transfer — much less a PACTrust™ with all of its attendant appendices, directions, escrow documentation, creditor letters, etc. — he or she The Judge is faced with a true pointy-horned dilemma. The only two options available are: 1) Get into Nexus-Lexus or out to the law library and spend hours in getting educated on the advent and history of land trusts, Can You See The Judges Law Clerk Doing This? or 2) render advice (pro or con) on something they know virtually nothing about (and To The Judge it will always be ‘con,” I can assure you).

I guess you could spend your profit from a real estate deal defending something this complicated in court or listen to an educated attorneys advice about land trusts, before you are put in this position.

Sincerely Thank You,

Iris

[landtrustwizard]

With all due respect, most of the 535 people who run our nation have ESQ. after their names -- they are called politicians.

[InvestorJoe]

The title "Esq" has no official meaning in the US. It has a common understood meaning but really anyone can use Esq after their name.

http://en.wikipedia.org/wiki/Esquire

Further, I guess by "531 people who run our nation" you mean Congress. There are 535 voting members of Congress and a handfull of non-voting members. However, I bet the Executive and Judicial Branches think they have a hand in running our nation too.

[landtrustwizard]

It's interesting. All this speculation about what judges will decide about land trusts and there has never been ONE decision against us. I urge any of the naysayers to show me a single failed, properly drawn, co-beneficiary directed, third party trustee land trust. Just one -- EVER! JUST ONE CASE WHERE A "SUED" CORPORATE TRUSTEE EVER LOST A CASE...OR WAS EVEN EVER SUED, FOR THAT MATTER.

One poster said, "You have to depend on some individual or company to be your "trustee". WE ALWAYS ADVOCATE A NON-PROFIT CORPORATE TRUSTEE, LICENSED AND BONDED. I USE EQUITY HOLDING CORP.

Trusts arent favorably viewed by all courts in all states. TRUSTS ARE USED LEGALLY IN ALL 50 STATES and are EXEMPT FROM THE DUE ON SALE CLAUSE IN ALL 50 STATES UNDER FEDERAL LAW. PLEASE SHOW A CASE TO PROVE YOUR POINT.

Some individual state courts may express an opinion on a single trust transaction, but Trusts have been used by the wealthy for centuries. The land trust started in England in order to hide ownership of property so that the owner would not have to pay taxes and join the military. They have been used in the US since 1891, and are the favorite choice of the wealthy, celebrities, politicians, etc. In fact, many banks hold property in land trusts. Chicago Title perfected the trust for Al Capone.

Land trust detractors love to speculate about what a judge may or may not do. Problem with that argument: They NEVER do it so there is no case to support their argument.

As for LLC's, I always place the property into a land trust, then take title in my LLC. Have a nice day.

[SPIVALAW]

It's interesting. All this speculation about what judges will decide about land trusts and there has never been ONE decision against us. I urge any of the naysayers to show me a single failed, properly drawn, co-beneficiary directed, third party trustee land trust. Just one -- EVER! JUST ONE CASE WHERE A "SUED" CORPORATE TRUSTEE EVER LOST A CASE...OR WAS EVEN EVER SUED, FOR THAT MATTER.

One poster said, "You have to depend on some individual or company to be your "trustee". WE ALWAYS ADVOCATE A NON-PROFIT CORPORATE TRUSTEE, LICENSED AND BONDED. I USE EQUITY HOLDING CORP.

Trusts arent favorably viewed by all courts in all states. TRUSTS ARE USED LEGALLY IN ALL 50 STATES and are EXEMPT FROM THE DUE ON SALE CLAUSE IN ALL 50 STATES UNDER FEDERAL LAW. PLEASE SHOW A CASE TO PROVE YOUR POINT.

Some individual state courts may express an opinion on a single trust transaction, but Trusts have been used by the wealthy for centuries. The land trust started in England in order to hide ownership of property so that the owner would not have to pay taxes and join the military. They have been used in the US since 1891, and are the favorite choice of the wealthy, celebrities, politicians, etc. In fact, many banks hold property in land trusts. Chicago Title perfected the trust for Al Capone.

Land trust detractors love to speculate about what a judge may or may not do. Problem with that argument: They NEVER do it so there is no case to support their argument. Have a nice day.

I may respond later,
wiz, You have no idea what 1000s of trial judges rule all over the country.
I have seen trust pierced many many times.
You only see appeals cases. Trial cases are not of record.
Trust are good, but only one tool.
Please give it a rest.

[SPIVALAW]

Wiz:

I am not anti trust. I am not a detractor.

I do disapprove when folks announce they are a cure all. Nothing is.

If the exact steps are followed and are in some states and "CO-OWN" that generally will work.
Good. I am happy you have a system of ownership that helps people.
I salute you.

There are other entities that can accomplish the same results.

I disagree with your statement that a trust makes real property become "personal property". A piece of paper can't change 100s of years and a whole body of law.
Real Property is real property.

Some of us have no desire to co-own properties under such a plan or scheme.
It is basically a shared ownership like a rent to own. Thattype system worked great for me in 1982 when I was new at this. It appears to be the system under Bills product that he and you sell.

According to the internet you sell all types of things, including trinkets. Trust seem to be your main product. I understand you want to promote them. Just please don't mislead new investors that Trust are the magic pill.

Some of us have no desire to have a trustee. That relies on a 3rd party.
When you need them, if they are a company like you use, they have to be open.
By the way do you know the owners are? You or Bill have any ownership with them?
Own any of their stock?

A trustee has to not be sick or on vacation or not involved in a lawsuit or a divorce or earthquate or hurricane. you have to "TRUST" a trustee.

As you well know, a trust wont always stop a bankruptcy.

It wont stop a foreclosure.
I have seen trial judges disregard trust many times.

Trust are a great tool and I use them often. Usually in a combination with other entities.

Let someone with a trust seriously injury a minor child who we represent.
After my investigaors, and depositions and my team goes through their records, we will likely pierce their Trust at trial, we have 100s of times.

Asset protection and trust and entities are great. But NOTHING is 100%!

A drill sargent with a white glove doesn't miss much.

May the force be with you.

PS I agree we should change out the people serving in govt.

[landtrustwizard]

Hi Howard,

Thanks for the nice reply. I enjoy a friendly exchange of ideas and thoughts. One thing, though. You said, "I disagree with your statement that a trust makes real property become "personal property". A piece of paper can't change 100s of years and a whole body of law. Real Property is real property."

Howard, we are not talking about a simple trust, we are talking about a land trust.

The Uniform Commercial Code, adopted by all 50 states, characterizes interest in an Illinois-type land trust as Personalty (Personal Property) vs. Realty (real estate). However, for federal income tax purposes, the beneficiary/ies of land trusts are treated as if they were in-fact owners of real estate. Because local laws view a land trust’s beneficiary interest as personal property rather than real property (except in Louisiana and Tennessee who treat such beneficiary interest as realty), it is UCC regulation (i.e., Article #9), rather than mortgage law, which governs the interest of the parties.
University of Illinois Law Review, Vol. 1988, p 68, FN#11 (Freyfogle, “Land Trusts and the Decline of Mortgage Law”)
Land Trusts for Privacy and Profit, Atty. Mark Warda, Galt Press, Clearwater Florida, (2002)


“Since the interest of the beneficiaries under a land trust is personal property, and since the trust agreement expressly precludes the vesting of any legal or equitable right in a beneficiary, partition is not available.”
Henry W. Kenoe, Keno on Land Trust, IICLE, p 3-012 Sec. 3-9 (1989)
CA. Civ. Code §872.210
CA Probate Code §50
CA. Probate Code §133(i)(c)
CA. Civil Code §955.1
Wile, “Judicial Assistance in the Administration of California Trusts,” 1`4 Stan. L.Rev. 231, 245-250 (1962)
CA. Estate Administration, §§33.11 to 33.35 (Cont. Ed. of the Bar, 1959)
Aronson v. Olsen, 348 Ill. 26, 29, 180 N.E. 565, 566 (1932); Breen v. Breen, 411 Ill. 206, 210-12, (1952).
Probate Code §§11600 et. seq. & 2463;





Antecedent debt, lien, or punitive obligation under law or contractual liability notwithstanding, ownership in a land trust will be characterized for all purposes as Personalty.
Kenoe on Trusts, IICLE, Springfield, Ill. (1989).
CA. Civil Code §863 – “Beneficiaries take no estate or interest, but may enforce the performance of the trust (a “chose in action,” and, as such, is personal property under CA. Law).
CA. Admin. Code §13303(d)
U.C.C. §9106




Restatement of Trusts, §131(1) “If real property is held in trust and a duty is imposed upon the trustee to sell it, then the interest of the trust is personal property.”
Breen v. Breen, 411 Ill. 206 103 N.E. 2d 625 (1952)


:SM003:

[SPIVALAW]

yes under ucc and tax law. I was refering to law governing lawsuits on asset protection.

[InvestorJoe]

Here is an interesting article describing how a financial planner might use entities to shield their client. http://www.fpanet.org/journal/articles/2006_Issues/jfp0406-art7.cfm

What caught my eye was ...
You advise your clients to put their real estate into a Virginia land trust. We prefer Virginia because it has excellent land trust law protection. The two other states to consider are Florida and Illinois. The downside of these two states is that Florida requires you to publicly disclose the beneficiaries of the trust and the volume of case law in Illinois gives some creditors the ability to pierce the trust. Land trusts are under-publicized but powerful asset-protection entities. The beneficiary of this land trust can be the husband and wife, or it could be their living trust. The trustee of the land trust will reside in the state of Virginia. That's it for step two.

The other interesting thing about that article is how convoluted the possiblities become.

Much like a Rube Goldberg machine.

[InvestorJoe]

I also noticed something interesting about your description of your trust program. You mention that you use an Illinois-type land trust model, not an Illinois land trust.

From your website...
Via a unique documentation system that utilizes the (Illinois-type) title-holding land trust model,

Why not use a real Illinois land trust?

Perhaps I am mistaken but since your trustee is in California, doesn't that make it a California trust? I wasn't aware that California had enacted land trust legislation, but then you describe it as a "title-holding land trust model" and perhaps that is the difference.

[landtrustwizard]

Howard,

A final thought. Yes, I do know the Trustee. This is Tom Standen, his wife, son and staff. I completely trust them with my property and, no, I don't own stock in the company.

http://www.sellerloans.com/staff_photo.jpg

Take care, my friend.

Joe, we do use an Illinois-type title-holding land trust. It is often preferable to use an out-of-state Trustee. As to California, as in many states there is no specific land trust authority but it is functional by the land trust's exclusion from prohibitions within trust and land use regulations. Actually the land trust has been tested in the Courts more in CA than any other state. See the Estate of Tutules, 204 Cal.2d 481.22 Cal Rptr. 427, (1962); and Walgren v Dolan, 276 Cal.Rptr. 554, (1990). California follows Illinois with regard to land trusts.

Gary

[SPIVALAW]

A handsome lot too!!!
But, they can't hold title to my property.

Ok you get the last word

peace

[IrisPen]

"But, they can't hold title to my property." The way it looks with revoked licenses, mine either.

there were two links here that I have removed. There seemed to be more to the story involving the links, and without the whole story I do not think it is right to just print one side. Jim Johnson- administrator

Iris

[Debbie]

Howard, Iris and Joe all have made their points as well as proved their points. I personally appreciate in seeing proofs and I thank you for that.

To avoid ongoing potential rebuttals, I'm now going to close this thread.

I apologize for any inconveniences. Thank you.

[Aldo]

Thanx, Debbie. Once again, you beat me to the punch.