Mark Kohler shows real-estate investors how to use a privacy trust and LLC structure to comply with new federal ownership-reporting rules while keeping their names off public records. The strategy involves deeding property into a trust, then naming an LLC as both beneficiary and trustee, which limits identity disclosure to the federal government only.
Chapters
Let's talk about a workaround that could work for you. So let's say you just bought a rental property and you had a mortgage, you had a typical closing, all good. You weren't required to file this report 'cause again, you bought it in a typical transaction and you now own this rental property. But as a real estate investor, you know you're going to want asset protection, so you're going to want to form an LLC. So now you have your property and your LLC set up and you're going to transfer the property with a warranty deed or a grant deed in some states, whatever the requirement is. And when you transfer this property into your LLC, you're going to have to file this report. Now, the first option in a workaround, you've got your property, you've closed, you want asset protection, but you want privacy. Not only privacy from disclosing this to the federal government, you might want some public privacy that people can't see your home address or even who the owner is. So in this workaround, you would form a trust, and this trust is going to be the recipient of a deed from you. You're going to deed the property into the trust. Some might call it a privacy trust, a land trust, a grantor trust. It's going to depend on the state you're in. And when you set it up, before you do any deed transfer, we're going to make an LLC the beneficiary of that land trust, of which you are the beneficial owner. We are also going to make an LLC the trustee of that trust. We want to make sure that those LLCs do not have your home address or your name on it.
