entity structuring ◊ title holding trust (tht) ◊ limited liability company ◊ limited...
TRANSCRIPT
Entity Structuring
◊ Title Holding Trust (THT)
◊ Limited Liability Company
◊ Limited Partnership
◊ General Partnership
By Ward Hanigan
Sponsored by: The Norris GroupSaturday, October 28, 2006
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Ward Hanigan
Real estate investor since 1972
Full-time foreclosure investor since 1982
Full-time Title Holding Trust user since 1982
1-on-1 foreclosure/trust trainer since 1985
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www.ForeclosureForum.com
Active foreclosure discussion board, with over 19,000 archived messages
Extensive collection of foreclosure tips, tricks and techniques
Historical foreclosure statistics from 1974 5 code sections pertaining to foreclosures Large assortment of fillable forms 70+ years of home loan interest rates
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Questions?
Okay by me, as long as we stay on topic…
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Entity Outline
Entity structuring is vital for the accumulation, protection and preservation of one’s hard-earned wealth.
Today, our focus is on the protection and preservation of your assets.
Entity Structuring
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ASSET PROTECTION
From Outside Threats (establish a low, low profile)Anonymity of Ownership
• Don’t put your name anywhere on any public, real property ownership records (no deeds or trust deeds, etc).
Multiple Entities• Hold your properties in separate hidey-holes—don’t cluster them all
under one roof.
Non-Disclosure of Transfer Tax on any Deed• Regardless of whether you’re buying or selling.
Entity Structuring
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ASSET PROTECTION
From Inside Threats (be they friend or foe)
Equity Shields• Friendly Trust Deed (recorded)• Purchase Option (recorded)• The Charging Order (threat of paying tax on phantom income)
Limited Liability Entities• Limited Liability Company• Limited Partnership or FLP
Entity Structuring
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ASSET PRESERVATION
Entity Structuring
• Avoidance of pre-payment of state income tax
• Avoidance of probate costs and delays
• Avoidance of guardianship difficulties and costs
• Privacy of ownership shift, upon sale or death
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Essential Entities
Entity Structuring
I. Title Holding Trust (THT) – Holds title to real property.
II. Limited Liability Company (LLC) – Acts as trustee of a THT.
III. Limited Partnership (LP) – Owns beneficial interest of a THT.
IV. General Partnership (GP) – Sidesteps California’s scheme for collecting advance payment of state income tax when an individual sells investment property.
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Holds Title to Real Property
A simple, legal method of holding title to real property, so that the recorded title to property is held by an appointed trustee. This type of trust was created in Illinois in 1891 by Chicago Title and is known there as the Illinois Land Trust. Everywhere else, it’s commonly called the Title Holding Trust (THT).
Title Holding Trust
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THT Benefits
Simplicity of formation No cost replication Speed of creation Unparalleled privacy No annual fees or taxes paid
Title Holding Trust
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Trust Principals of any Trust
Trustor – party who funds/creates the trust
Trustee – party who administers the trust
Beneficiary – party who owns the trust
Title Holding Trust
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Trustor
The trustor creates the trust and then
transfers the title of real property into the
trust via a transfer deed. The trustor is also
known as the settlor, grantor, donor, or
maker of the trust.
Title Holding Trust
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Trustee
The trustee, upon written direction from the
beneficiary or owner of the trust, executes
documents that affect the legal title to the
trust’s property. The trustee is not given, nor
exercises, any possessory rights or powers
over the trust’s assets at all.
Title Holding Trust
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Beneficiary
The real power holder in the THT.
The non-public owner of the trust, who has retained all possessory powers and privileges regarding the real property that’s held in the name of the trust.
Through the power of direction, the beneficiary controls the acts of the trustee as they affect the title of the Trust’s property.
Title Holding Trust
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Putting It All Together
Trust Entity – Holds the title to real property.
◊ Limited Liability Company – Acts as the trustee of the trust.
◊ Limited Partnership – Holds the trust’s beneficial interest.
General Partnership – Sidesteps California’s advance payment of state income tax.
Title Holding Trust
Contact Information
We appreciate your attendance today.
Ward HaniganInnoVest Resource Management4569-A Mission Gorge PlaceSan Diego CA 92120OFFICE (619) 283-5444FAX (619) [email protected]