A Revocable Land Trust may be created by an individual, a group, a partnership, a corporation or other business entity. It has become a favorite method for the holding of real estate by syndicates, sub-dividers, builders, industrial concerns, partnerships, corporations and professional groups or societies. (Since corporations cannot own residential real estate, they use Revocable Land Trust/s as the title holder, and assign beneficiary interest to the corporation). Of course Trusts are allowed to own residential real estate.

A Revocable Land Trust can be created quickly and easily. All that is required is for the interested parties to have title to Real Property conveyed to a Revocable Land Trust by a form of Deed in Trust, and enter into an agreement with the Trustee, directing him/her as to the holding of title, and to the persons who have authority to direct its conveyance.

A Revocable Land Trust offers many beneficial benefits, and protects real estate 100%:

* The Beneficiaries of the trust are vested in their own right with authority to occupy, manage and operate the property and to collect and receive the rents or other income, including the proceeds of any sale, mortgage or other disposition of the trust property.

* The Revocable Land Trust may be used in estate planning and in structuring testamentary dispositions.

In a Revocable Land Trust, the beneficiary retains complete control over the real estate. He manages it himself or he may employ agents to manage it for him. He collects and distributes the income, insures, develops, finances and directs the lease or sale of the property as he sees fit. He may terminate the trust at any time or add property to the trust when he wishes. Exclusive and full power in all such matters rest in the Beneficiary.

Although the practice of conveying real estate (commercial) through a Corporation is common, it is not as practical nor is it as inexpensive as the Revocable Land Trust. Generally, a trust is the better device since the income from trust property is distributed directly to the Beneficiaries and is included and taxed as part of their annual income.

Where title is vested in a corporation, the relatively high corporate income tax is levied on the income from the property and the balance of the income, distributed as dividends, is again taxed to the recipient as income. Revocable Land Trust arrangements enable one to avoid time-expending projects, such as stockholders meetings and board of directors meetings, all of which are part of expensive and normal corporate procedures. Further, the deductible depreciation may be taken directly by the Beneficiary through a Revocable Land Trust.

Joint Tenancy can in some States be an unwise way to hold title to your major items of real property. The first problem is that you have lost control of that property. It cannot be sold without the consent of the other joint tenant/s and you could become liable for their debts and taxes. The biggest drawback of Joint Tenancy between spouses is that it can create huge capital gains tax liability for the surviving spouse.

* The beneficiary can be a person, corporation, partnership, another trust or any combination thereof.

* In some states the trustee can only be a natural person or a specially licensed trust company.

* A person cannot be both Trustee and Beneficiary.

* Not only land, but also mortgages, leases and other interest in land can be held in a Revocable Land Trust. It cannot hold assets or property not related to realty.

* The Trustee has no duties or powers other than to hold bare title to the property.

* The Beneficiaries exercise all control over the assets.

* Some states do not recognize this Trust with a Trustee that only holds title and nothing else. By assigning some actual duties to the Trustee, a Trust in any State could be used to hold title to real property. Such duty may be to sell the Trust property at the end of a stated period, say 20 years.

This information is not intended as legal advice, it is to inform and educate the reader. If further information is required by the reader, further research is recommended. However, if you understand what you have read, and wish to have a Revocable Land Trust structured, call 918-459-9637 and ask for Bob or Craig.

© 1996- 2004 Information Resource Associates