Land Trusts and Asset Protection

There has been much published in regard to land trusts and asset protection. However, many real estate investors are completely oblivious to the fact that the land trust, in and of itself, provides only very minimal potential asset protection. Don’t get me wrong, land trusts are great vehicles for privacy, but privacy will only take you so far. You must use a land trust in conjunction with an entity such as an LLC in order to gain the full benefits of asset protection.

Things to think about when creating your LLC include: does the state you form your LLC in permit single person LLC's? Is there a state statute specifying that creditors must get a charging order as their only remedy when they have judgments against an LLC member? Is your LLC going to be able to distribute enough cash to you to cover your pass through taxes stemming from the LLC?

These are all important questions to answer, and while there are many benefits to purchasing property using a simple to create fill in the blanks form land trust, there are considerations relating to taxes and asset protection that merit your looking into the possibility of including an LLC as a part of your structure in addition to a land trust.

Tagged as: asset protection, land trust, real estate investor training