Advanced Trust Strategies

Custom Strategic Plan

Below is a short list of various applications and structures. You can use any variety of different trust types and statutory business organizations to create a specific outcome. We start with the end in mind then design a structure. See how many of these might apply to you.


Divide Marital Property – married couples divide joint assets for safety. Rather than 50% of 100% – each spouse owns 100% of 50%. Name the other  spouse as successor beneficiary. Why expose 100% of assets to risk?

Pre-Nuptial Alternative – the standard prenuptial agreement is always complicated, emotionally fraught and subject to legal challenge. Use a trust to legally isolate assets in advance. Why spoil marital bliss with business?

Trust & LLC – for more protection make an LLC the beneficiary of your Trusts. Organize the LLC in any state you wish. If only a beneficiary, no need to register as foreign entity.

Trust & Inc – for additional privacy the corporation is your trustee. Incorporate in any state you wish. If corporation is nominee only for holding title, greater privacy and reduced filings.

Grantor and Non-Grantor Strategy – use a C corporation as Trustee to create non-grantor adversarial relationship. Works best with married couples due to unlimited tax free gifting.

Change & Challenge Legal Situs – the real estate’s trustee is located in one jurisdiction. The beneficiary’s intangible personal property rights are in another.

State to Federal Court – use multiple trustees located in different states. If all trustees in one state then single state jurisdiction. If trustees in multiple states then federal jurisdiction.

Create Debt to Protect Equity – use a trust to create debt and minimize equity. There are several valid reasons this works such as gifting.

Protect Heirs – typically heirs receive property in their personal name. Is there a safer way? Establish a trust for your heir in advance of the gift. It can protect inherited assets from creditors and other personal hazards.

Reduce Landlord Liability – instead of contributing property to the trust, sell it to the corporate trustee. Use a shared appreciation note (debt) to safely encumber the property.


Joint Venture Safety – partners are often individuals, corps or llcs. Use real estate trusts to hold property as tenants in common. Each trust would have its own beneficiaries and estate planning features.

Master Leasing Strategies – property managers as agents create vicarious liability for their owners. A safer solution is to have have your manager as a tenant with permission to sublease. Tax benefits too.

Stacked Trusts – portfolio of rentals are held in multiple real estate trusts yet all have a common beneficiary – your living trust or LLC. Underlying owner becomes invisible to the public, and only reports net rental income on personal tax return.

Create Bearer Corporate Stock – rather than registered in your own name, use a holding trust to anonymize your ownership. Easily transfer shares without re-registration.

Create Bearer LLC Shares – rather than registered in your own name, use a holding trust to anonymize your ownership. Easily transfer shares without re-registration.

Divide Title by Time with Estates – If you held an estate for years or life estate, any court judgment would extinguish automatically at the end of that period without recording a deed.

Combinations – a real estate trust in one state, a corporate trustee from another state, an LLC as beneficiary from a third state. Corporation is LLC manager, other member is holding trust.

Avoid 1099 at Closing – a corporation is your real estate trustee. Directs sale proceeds into a business trust bank account.

Create Diversity of Jurisdiction – Form a real estate trust in high tax state under the laws of another while using a foreign corporation as trustee to establish domicile of the trust.

Multiple Taxpayers – by dividing up income, you can reduce overall tax burden. Rather than single return with all income listed use various trusts spread risk and reduce visibility.


Avoid EPA Liability – a real estate trust to avoid personal liability. Use equity as debt to control the property.

Step up Basis Foreclosure – rental owned and sold by trust on contract later defaults. Rather than repossess, sell it to another trust. Three party transaction.

Avoid Deed in Lieu – defaulted buyer offers lender deed in lieu. If accepted would dangerously extinguish debt with all other liens move up in position. Real estate trust buys defaulted note and preserves first position.

Step up Basis Joint Venture – each investor with their own trust insulates each other as well as the property. If anyone dies their share inherited by the remaining parties while partners pay off estate.

Low Profile Transfers – a grant deed recording is subject to reporting and transfer taxes. Transact the beneficial interest. Stagger events using time differential.

Avoid Intangible Tax – out of state trustee forms business and real estate trusts. Business trust beneficiary is corporate nominee.

Avoid Gross Receipts Tax in CA – rather than LLC, use Business Trust. Use your LLC as beneficiary.

No Foreclosure, Repossess – if you use the trust vehicle to sell a property, and the buyer defaults, no foreclosure. They become tenant at sufferance. You evict & repossess beneficial rights.


THREE BASICS:

  1. Trusts hold title to assets
  2. Corporations are for cash, pensions, tax benefits
  3. LLCs provide statutory protections

You can use each individually or in layered combinations.


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