EP 169 – Protecting Your Wealth and Assets with Land Trusts with Joe Seagle

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Show Notes

“People should be sued for doing bad, not for doing well.”

This motto from today’s guest, land trust expert and attorney Joe Seagle, sets the tone for this episode’s deep dive into asset and wealth protection.

It’s an unfortunate reality that successful individuals often become targets for lawsuits, but land trusts can be a strategic tool in safeguarding assets. In this episode, Joe explains how land trusts can offer anonymity and protection for property owners, and what other options are available to real estate investors if land trusts aren’t supported by their state.

Joe also explores different asset protection strategies, providing insights on the risks and tax considerations of land trusts, the differences between land trusts and LLCs, and how to use each to protect your investments.

Tune in to learn about land trusts and if they’re the right way for you to protect your assets!

Topics discussed in this episode:

  • Land trusts and the role of trustees
  • The process of hiding assets
  • Asset protection for joint property owners
  • Land trusts versus other trusts
  • Lending and land trusts
  • Cons of land trusts
  • How land trusts can help real estate investors
  • The cost of setting up a land trust
  • Tax complexities of land trusts
  • Varying land trust state laws

Connect with Joe Seagle and learn more about services offered at MyLandTrustee here: https://mylandtrustee.com/

Listen to the Episode

Read the Transcript

CKP E169 - Protecting Your Wealth and Assets with Land Trusts with Joe Seagle
Joe: [00:00:00] there are lawsuits, of course, we get sued quite regularly, code enforcement violations, everything comes to us.
So the client's name is not associated with that. So that's, of course. The biggest thing we hide because it is the, the biggest thing that most people own, that is public record that everyone can see. So we, we keep that their name off of the records for that.
Mike: What is going on guys for today's episode of the collecting keys, real estate investing podcast, go and get your coffee and your caffeine pills. Because we have, we have a deep dive into one of the most, I would say, uh, that's really complex, but like in the weeds, um, areas of real estate investing, it's very important, but we have, we have Joe Siegel here from Orlando.
Who's talking to us and.
Asset and wealth protection. And I can say without a doubt, this is something that I know you disregard. [00:01:00] We disregard it. I know people that own hundreds of properties that don't do what we go into in this. And basically where it's been left is they are leaving themselves massively exposed to, you know, financial risk if they were to get sued.
And honestly, if you're doing business, not if you get sued, it's when you get sued.
Dan: Yep. Even us in our little business, we get random lawsuits sent to us. I mean, ambulance chasers, but they're like, Oh, we're going to sue you for using our likeness and stuff like that. And so it's like, like it's not, if it is when, and like, it does feel like most investors, when you talk to them, including ourselves, you're just walking a tight rope, especially when you talk about, um, liability things and how he dives into showing, like, cause he used to be a lawyer that would go after.
People. And he said, the first thing they would look at is their insurance policies. And then, and beyond that, what assets do they own? So asset protection and hiding the assets, which he talks a lot about is super key to your success longterm here. So you don't lose [00:02:00] your ass.
Mike: And, and we'll be honest, the episode is a little bit dry, but it is also highly, highly educational, right? He drops some stuff in here that, you know, I would say is like the most important part of that curious sort of really real estate infrastructure that you build out for yourself. Um, a lot of the land trusts that he talks about do are specifically for Florida.
So that is something to keep in mind, but sort of near, I don't know, this, that. And third of the show, we started to talk about these different series LLCs, um, and the way it's set up like self directed IRAs and like a bunch of different ways that work, um, nationwide to get the same level of anonymity so that you don't, you know, lose all of your stuff to someone that, you know, you get into a car accident with, right.
And that is a very, very real thing that does happen to people. So this is something that you definitely want to listen to take notes and take action. After you listen to this and try to figure out what you're going to do next to protect yourself. But anyways, guys, Joe drops his [00:03:00] website here at the end of the website at the end of the episode.
So absolutely reach out to him. And if you have anyone that you know that owns rental properties and is leaving themselves at risk to potentially lose those to a lawsuit or some other sort of litigation issue, make sure that you share this information with them as well. You know, we're all, we're a small community, real estate investors.
Even though we compete, we also, also should look out for each other and your friends and family, you know, except for that. But anyways, guys, enjoy the show with Joe Siegel and take some notes. It's a dense one.

Mike: All right, Joe Siegel, super excited to have you on the show, man. We are going into a topic that I admittedly have no knowledge about. So I'm super excited to learn along with the rest of the listeners today. Um, cause you are an expert in land trusts and You know, you do a whole bunch of stuff with that.
You set those up for people. You're the expert on land trust. Um, so I'm [00:04:00] super excited to hear, you know, all the information that you can share with us about those and about what you do. Um, but before we dive into those details, maybe give us a little bit of a background about you, kind of how you got into this line of business and, uh, you know, everything that you've come to learn about the real estate industry that you're excited about.
Joe: Oh, yeah, sure. Thanks guys for having me on. I'm really happy to be here
Dan: hmm.
Joe: And I, I'm a lawyer first and foremost, um, licensed practice in DC, North Carolina, South Carolina, and Florida. My main office is based in Florida, in Orlando, and we have land trusts all over the state. So I have my law firm, my law practice, and it sort of focuses on asset protection, especially for entrepreneurs.
And investors, because I believe that people should be sued for doing bad, not for doing well. That's sort of my motto.
Mike: Yeah.
Joe: part of a big part of what we do is we help people hide [00:05:00] their assets, hide, hide what they have. And if no one can see what you have, then you're typically not a target for them.
They're going to. Search you and see what you've got to see if you're what we call judgment proof before they bother going after you When I first started practicing law, I was a personal injury attorney and medical malpractice attorney back in the late 90s in North Carolina And I learned from experience that the first thing we were going for is insurance So we're looking for insurance coverage, liability coverage of some type.
And if there was none, we would often tell the client that while they had a case, they had damages, unfortunately it was going to be uncollectible. Because we would research the defendant and see if they had any homes to see if they had any major property holdings anywhere. And when we found that they [00:06:00] had nothing, we would tell the client that there was no use in wasting their time and energy in pursuing the case against that person. So, one of the subspecialties that we've come up with is And we have a company based in Florida called my land trustee that serves as land trustee, uh, for real estate investors, celebrities, high net worth individuals, all over the state of Florida, we have over 2000, I think over 2, 100 now properties that we hold in trust for these folks, a lot of YouTube creators.
They seem to make a lot of money and, uh, then they have warehouses for their merch. So we hold all of that in trust so that in case they tick somebody off because they didn't give them the right cheat code, then we, uh, we hold their property and the angry [00:07:00] gamers can't find their warehouse and burn it down.
Uh, they can't dox them. They can't, they can't come after them in any way. Also. Professional athletes for them, but of course, our largest block are real estate investors and private lenders tend to be our, our largest source of, uh, users of the land trust services that we
Mike: Yeah. No, that's awesome. That makes sense. And it's funny. I didn't realize there was such a YouTube presence down in Florida. Um, but I mean, I guess, you know, nice weather. You want to be able to film 24, 7, 365. Right. Um, so when you say that you, you help people hide assets, I guess, what's the general structure of that?
You know, obviously you're the, you're the trustee. Is it setting up a bunch of LLCs that you guys are the trustee of, or like, what's the general, you know? Behind the, the curtain paperwork and everything look like.
Joe: It's a good question. course, in the United States, real estate records are. [00:08:00] Public records, meaning that anyone can search them or anyone can see them. The most common way that people search records to see what you may own is by searching the property appraiser's records. And I'm sure investors listening to this, they search property appraiser records all the time to see who owns a property so they can contact them to tell them they want to buy it.
I know because I get those texts and calls hundreds of times a week because we own over 2000 properties. So we. Instead of your name appearing there, we create a land trust under the Florida statutes in our case, and we are the trustee of the trust. So our name appears on that public record. Our address appears, our phone number, our website, everything that's searchable about that property.
Leads back to us. Now, internally, we, of course, we maintain a copy of the trust agreement that we've created. And that trust agreement is with the beneficiary. [00:09:00] Beneficiary is typically the investor, the entrepreneur, the YouTuber content creator who wants to remain private. And the only person who. Who sees that as us, we're the only ones who know that under the terms of the trust.
We don't disclose it to anyone without a subpoena or a legal reason to do so, which does happen from time to time for some of our, our clients who aren't as top notch as
Mike: Like drug dealers and all those sorts of people that also have warehouses. They need to store
Dan: Ha ha ha ha ha. Ah, ha
Joe: convicted bioterrorists, uh, people like that.
Mike: I actually, is that like an actual thing that.
Joe: yep, yep.
Dan: Interesting.
Joe: That's all I'll say on that. Um, so it's not unusual. Yeah, it's not unusual for us to get the phone calls, to get the junk mail, to get the requests for, we want to buy your property, are you interested in [00:10:00] selling it? Also to get every once in a while, there are lawsuits, of course, we get sued quite regularly, code enforcement violations, everything comes to us.
So the client's name is not associated with that. So that's, of course. The biggest thing we hide because it is the, the biggest thing that most people own, that is public record that everyone can see. So we, we keep that their name off of the records for that. And of course, for other assets that people may own in other states, we will set up typically Wyoming LLCs, Delaware LLCs, Nevada LLCs.
On those properties where in other states where they don't have a land trust statute or they don't have a land trust case law that allows it like Florida, Indiana, Illinois, uh, those states have that available to them. Most other states simply don't have the [00:11:00] statutory or case law framework to allow them to use that.
So instead we end up. Doing, uh, the LLCs for them.
Dan: hmm. On those LLCs, then are you guys the owner of the LLC? Is that how you hide the, the actual owner's name?
Joe: In some cases we are, are, we have a company that acts as the manager of the LLC, because in some states like Florida, for instance, at least a manager must appear on the records on the, on the corporate records. So that manager's name and address must appear. So we will sometimes act as manager of the LLC.
So our name appears, but again, the members. The true owners of the company remain in the background and we do what they tell us to do. We sign what they tell us to sign, just as we do as trustee. We sign what they tell us to sign when they tell us to sign it. And as long as it's not illegal or faults, we're happy to do [00:12:00] so.
And we do that quite often.
Mike: So, so kind of like the whole concept of what you're saying makes sense. So I guess what I always have wondered with, you know, things like this, someone buys a property. you know, five years ago. They buy it in their personal name. It's a, you know, rental property, primary residence, whatever.
They're going to put it into a land trust. Someone can go and look at the chain of title and see that, you know, Mike DeHaan owned the property and transferred it into a land trust with a quitclaim deed or something similar. How do you sort of like protect them in that realm where they can like literally just sort of like see that the previous owner before the land trust was the individual?
Joe: I always go back to that saying that the best time to plant an oak tree was 20 years ago. The next best time to plant the oak tree is today. It's the same way with this, with, with any asset protection that you may do. Yeah, doing it from the get go would have been the best practice. [00:13:00] Absolutely. Go ahead and put it in your name or put it in the land trust name or in the LLC name from the get go is absolutely the best policy.
Fortunately, most plaintiffs lawyers do not do full title. Searches to see what you did on. The only time we really see that come into play is if you have been sued already, or a claim has arisen already, and they're going to come after you. They're going to start going, okay, well, we saw that he owned this property and now he doesn't own this property.
So they're going to search back and try to dig into that and try to find it. But if. Claim hasn't arisen yet. It's been a year, two, three years since you put it into the LLC. They're not going to see it. They're not gonna know about it. And better yet, they can't go back and try to get it. So it's always, it's not the best practice to take title in your name and then later move [00:14:00] it into an LLC or a land trust.
However, the next best time to do it is now go ahead and get it done, get it out of your name, get it into the LLC, get it into the land trust, depending on your jurisdiction, what it, what would work best for you and, and just do it, you know, get it done.
Mike: Yeah. For people that own properties jointly with like other people, is it the same sort of like general process? So for example, you know, I own a bunch of rental properties myself. Dan owns rental properties himself. We also joint own, um, rental properties. So I guess the hierarchy of that, um, is it like we would need to basically have three different land trusts?
Like one for my individual, one for Dan individual, and then we'd have a third one for, um, Like our joint stuff or how does that all come together?
Joe: number one, you'd want a land trust for each
Mike: Okay. Gotcha.
Joe: as so that they're [00:15:00] separate from each other. I always treat a land trust like a. Basket for eggs and each egg is a property. So if you drop one basket, only one egg breaks, you're not going to break every egg you have. And the nice thing about land trust is they're fast and easy to set up and they don't cost as much as an LLC.
And you can set one up for each property you have. Typically we would set up one land trust for a property and. The two of you would be the owners of the beneficial interest at 50 however you want to break that down inside the land trust. And one of the nice things about whether you hold it in a land trust or an LLC, if you're both inside that entity that owns that property, then you're free to move things around, but you don't have to worry about what's called a partition action in the future.
If you and Dan on the property together, just [00:16:00] in your names. And you get mad at each other because partners never get mad at each other. But if you do, and you want to break up, there's, there's this action called a partition action, which is a divorce for property owners, where you sue each other, or one sues the other one saying, I don't want to own this property with you anymore.
So I want to split it. And the first thing the judge is going to do, he's going to try to split it physically. So if it's vacant land, let's say you own a hundred acres, the judge will say, fine, survey a line down the middle of it. You get 50, you get 50 acres. We move on, but if it's a house, you can't draw a line down the middle of the house and break it in half.
So in that case, what you end up doing is the judge orders the property to be sold at a fire sale. And the house is sold. The investors who are bidding know that this is a distress sale. So they're going to, the vultures will circle, they'll. Spend as little as possible to buy it. And then you split whatever is left [00:17:00] over after the lawsuit and the broker's fees and court fees and everything else are paid on this lower price.
But if the property's inside an LLC or inside of a land trust, then that is not available at all to you. The part partition action is not available. You can't do that,
Mike: That's interesting. So as like a partnership, especially if you're one that probably has a little bit lower leverage, it would be very beneficial for you to set up a land trust. Um, so like, I guess that question was kind of spurred. There's this huge trend right now, especially with younger people. Where they're just trying to like ride on the coattails of bigger investors.
And they're like, you know, I've met so many people that are like, I own all these properties, but they're all partnerships and they're all with different people and it's all because their dad has a bunch of rich friends that loop them into different properties. Right. Um, and I imagine if they wanted to have any sort of, um, you know, anonymity with this via land trust, it would be an absolute freaking nightmare.
Um, but it might be [00:18:00] beneficial if you can get people, you know, talking and doing it.
Dan: Right.
Joe: and let's, let's take that on the flip side. I would say if you're the rich uncle, you're the rich friend. I wouldn't want to bring in nephew or niece and say, okay, well, fine. Come on into this deal and own this with me. And we'll just put your name on the deed with me because you've just handed them the keys to that property divorce of partition to sue you, even if they only have.
1 percent or 5%, they can bring this up and make your life awful until they get what they want out of you. So what you do instead is you do either the LLC or land trust and say, look, you're going to buy into this and you're going to be an active participant. I'm going to expect you to do X, Y, and Z at least at the least with this property.
If it's nothing more than you have to show up at the property at least three times a week to check the status of. The re the rehab, you [00:19:00] know, whatever you may come up with for them to do. But if you don't do what you're supposed to do, I'm the majority beneficiary, if it's a land trust, or I'm the majority member, if it's an LLC and I can kick you out and move on with my life and you're, you're done, you're out.
So really, I mean, that's the way I would look at it more. It, it really protects those seasoned, more established and wealthy. Investors than the younger investor, but by the same token, the younger investor is in there and can say, okay, well, I'm going to learn, it's going to be a mentorship opportunity for me to learn, but it protects both sides.
Uh, inside those, whether it's an LLC or a land
Mike: Yeah. Yeah. Yeah. That makes sense.
Dan: What does, uh, what's the, I'm, I'm kind of thinking as you're saying you're talking through this process, what would be the difference between a land trust and something like you would hear like [00:20:00] irrevocable or revocable trust that you hear people putting together to put assets in for similar like asset protection?
Is there a main difference or, or a point that you would discuss about that?
Joe: Yeah, there's big difference between revocable living trust, irrevocable trust, and a land trust. And when a lot of people are looking at land trusts in other states, what they're really talking about is they strip down revocable living trust. In most states, revocable living trusts are used for estate planning.
To avoid probate. Everything is titled into the trust so that when you die or you become incapacitated, that trustee already exists, the trust already exists, and that person or trust company, whoever it may be, will then step in and Disperse your distribute your assets according to the trust without it having to go to court without a judge having to be involved.
So it's faster and cheaper on the back end, [00:21:00] but you typically pay more on the front end. So it sort of, it evens out a little bit,
Mike: Yeah.
Joe: but the big thing there is that the trustee in a revocable living trust has a duty to ensure that the property remains. Profitable in a lot of states, they have what's called the, the, the reasonably prudent trustee, reasonably prudent person standard that that trustee has to make at least a 3 percent return.
In some states on the assets that are held in the trust. So a lot of trustees will go, okay, well, we're going to sell all the real estate really fast, convert it to cash, put it in the stock market, and I'm safe. I don't have to worry about it. Land trust is a lot more passive. The trustee only acts with the direction of the beneficiaries or a person who may be called the holder of the power of direction and that person will, if there's [00:22:00] multiple beneficiaries, a lot of times they'll appoint one person who tells the trustee what to do and that way the trustee only has to talk to this one person instead of corralling the cats, so to speak, and trying to get them to tell the trustee what to do, but the, Revocable Living Trust is great to use to avoid probate and for, uh, but not so much for asset protection, whereas, because your name is typically the trustee, you're, you're typically your own trustee as well, at least initially, and, uh, it doesn't really give you much asset protection.
Now there are trusts out there called, uh, domestic Asset Protection Trusts, and about 40 states have passed laws that allow the domestic asset protection trust. And those are sort of outside the scope of this conversation today, but we're starting to see those more and more. They, they're starting to take the [00:23:00] place of what we're offshore trust.
Where you would
Dan: hmm. Mm.
Joe: your money to the Isle of Man or the Canary Islands or wherever and a trustee would be there and manage that money for you and all you got was income, but those, they got to be so prevalent that 40 states so far have passed statutes to allow some form of that and still provide protection.
And this is, this is one of the big things I read about, you know, a lot of people go. What's not fair for somebody to be able to hide their wealth. It's not fair for somebody to be able to protect their wealth. And I'd go, well, if you're going to take that tack, then let's just get rid of corporations and LLCs and trusts altogether.
And everybody shall hold everything simply in their individual name. I mean, that, that would be really rocking a boat, but again, whether you put it in. As soon as you [00:24:00] buy the property at the inception or whether you put it in after the fact, it all comes down to when you did it in relation to when you got, when you get sued. And when the claim arises, the more time that passes between that date of when you put it in the trust or when you put it in the LLC and the date that the claim arises, that helps more and more time just makes it more and more, makes it look better for a court later that you haven't just tried to hide something.
And also, again, I mean, if you're involved in criminal activity, the court's not going to really let you hide anything. Anyway, uh, anywhere. So if you're, if it's just civil though, typically these methods work just fine to keep the assets from being taken by your creditors.
Mike: That makes sense. How does, um, having like your properties in a land trust, because a land trust is on title, right? How does [00:25:00] that affect lending? So for example, people want to refinance their property. Can the land trust actually get a loan or do you need to like transfer title back to the individual to get the loan or to an LLC to get the loan?
Joe: That's a good question. We get that a lot and it depends on the lender. Uh, in fact, I just signed documents before I came in here today for a gentleman who we hold his home in a land trust, and I signed some of the documents for the loan, for the refinance, and he's going to sign the rest of them. He signs the promissory note and everything else.
So that lender's fine with it. Uh, usually you are going to be with a commercial lender. More so than a Fannie Mae or Freddie Mac lender in Illinois, where land trusts are extremely prevalent. Almost everybody owns everything in a land trust Fannie Mae and Freddie Mac have developed their forms to work with that.
Unfortunately, [00:26:00] Florida, they have not. And also if it's in an LLC or a corporation, of course, Fannie Mae and Freddie Mac will not lend. To anyone but a human being in 49 other states, unless it is, like we said, a revocable living trust, they will, they have forms for that as well. It's just when it's held by a third party trustee that they just can't handle it.
They can't do it and except in. Illinois, but most parts, it's going to depend on the lender. Like I said, we've got a lot of commercial lenders who will lend to a land trust. We'll lend to an LLC, especially for investors. Uh, there are quite a few of them out there and in. Florida, at least a lot of the commercial investors who work with, um, uh, commercial lenders who work with, uh, investors are very happy to have the property held in either an LLC [00:27:00] or a land trust, because then they know it's, it's what we call it's a special purpose entity.
It's just, that's the only asset that that entity owns. So if they go to foreclose, they don't have to really worry about lots of other. Judgment creditors out there. They're going to have to find and serve in their foreclosure. Makes it makes their life a little bit easier.
Dan: Interesting. So is there anybody, as we're like talking about all these situations, is there anyone, um, like, that these aren't good for to have a land trust? Like, is there a reason why somebody wouldn't want to put their property, whether it's a single family home, a commercial property, or just a life circumstance?
Mm.
Joe: Sometimes the land trust doesn't work well if they aren't, if, if the client is not familiar with it. So we find a lot of time is spent educating how this is going to work. A lot of people have heard about it and they think, Oh, that'd be great. So we actually have an email we send out that [00:28:00] says. They are great.
However, here's six or eight reasons why you may not want to do it in Florida and in a lot of states, anytime there's a change of title, that is a reassessment. The property appraiser can, any caps that are on the valuation, any exemptions you may have all disappear. And all of a sudden the property is taxed at almost market value.
So your taxes go up. So typically if someone has owned a property for a very long time in a certain name, we will check before we recommend changing title because that can. I can screw you up in Florida. We're having a real issue with insurance, which I believe we're just the first domino to fall in the country, uh, Texas and Louisiana and lots of other [00:29:00] states are starting to have problems with insurance in general, so it's going to be. What you're seeing in Florida is, is just the beginning of what you're going to start seeing everywhere else, especially if you have wildfires. Tornadoes, anything, uh, the weather's just getting wacky. So it's, it's getting tougher and tougher to get insurance. So anytime there's a change in title, the insurance company looks at that as a reason to go, ah, we can drop you.
We can terminate your insurance because we no longer write new policies. And this would be considered to be a new policy for you in the state. Um, so it's a case by case basis that we. Talk to the client very carefully about their situation before we say, yeah, let's just throw it into an LLC. Let's just throw it into a land trust.
Also, if you've got a very large mortgage on the property with very little equity, a lot of times we'll say, just leave it. Nobody's going to want to touch [00:30:00] that property anyway, because there's not enough value in it to bother. You've taken the cash out and, and spend it elsewhere. So we won't bother with that either.
So there are certain situations where we will. Say it's just not worth it. It, the, the cons outweigh the pros sometimes. Definitely.
Mike: Do you have a follow up Dan, you thought you were about to speak?
Dan: Well, no, I was just going to say, I appreciate you saying that because it seems like in this world, when you're a hammer, everything's a nail and there's people that say, well, we do land trust everybody. It's right for everybody. Even though in some cases it might not be.
Joe: Right. Well, and that's the thing too. I mean, being a company that's owned by an attorney, like. Myself, attorneys, we have it beaten in our head. We have to do what's best for the client, not what's best for us. So we will look at things. And there are many times I give advice. I do consultations all the time by zoom and [00:31:00] probably about 30 percent of the time.
The advice is stay Pat, where you are is just fine. I would love for you to spend more money with me, but it would be a waste of your money and could actually be detrimental if you do this. And we've unfortunately been called on, we have to fix problems sometimes that other trustees or other lawyers who aren't as familiar with this, they jump in and they say, Oh, well, I can find the format of a book and just do it.
And they'll just do it. And then all of a sudden mom has lost. Her homestead, uh, the property's now been reassessed at three times the value it was being assessed at and all the exemptions are gone. So property taxes just went from 500 a year to 8, 000 a year overnight because the, the hammer saw a nail and hit it.
And I agree with you. I, I, I, I see that from all kinds of attorneys. It's, You know, if you're a slip and fall attorney, well, let's find a slip and fall, you know, way [00:32:00] that we can wrap this in somehow it's, it's very common that everybody tries to make it fit to their practice area.
Mike: Yeah, and that's just like a whole thing too where there's most consumers out there they don't understand that there are different kinds of lawyers, right? They're like, oh, I know my... Jimmy's a lawyer, my nephew, you know, I've talked to him and it's like, Whoa, he's like a criminal attorney. He's not really going to be able to help you figure out your, your land trust.
Right. Um, so I guess at what point along an investor's journey, right. So what scale should they be at, um, when they start looking at, you know, potentially setting up land trusts, I mean, they should do with like property number one, or should they have a certain income, a certain portfolio size, certain number of assets.
Joe: That's a good question. And again, it comes in and in the consultations all the time. One of the first questions I ask any investor, especially if they're a new investor, I go, well, what do you do for your day job? And well, I'm a nurse practitioner. Oh, I'm a dentist. I'm a doctor. Oh, [00:33:00] okay. Well then from the get go, we need to start protecting you because you are in a high risk profession that you will most likely be sued on a regular basis.
And. We need to make sure that all of your other assets that you have are separated away from you as much as possible so that no one can touch those should something go horribly awry that exceeds your malpractice coverage, which it does happen sometimes. And then, beyond that, I look at. How much experience do you have? And I always tell, we actually have a new investor consultation that I'll do with new investors where we'll talk with them just to see where they stand, what their other jobs are, what their risks are. And what they own, what scares me are the seasoned investors who come in and Hey, I've got [00:34:00] 47 houses and I own all of them in my one LLC, my one company, some of my flips, some of my buy and hold.
And I'm sitting there, you know, the tax issues are coming in. Number one, I'm sitting there thinking of the tax problems he's going to have, but then I also started thinking about all the liability issues. One of the questions I always ask, I go, well, have you ever had a code enforcement violation against any of these properties?
Oh yeah, all the time. I go, well, have you ever tried to refinance one of the other properties when you had a code enforcement violation against another property? Yeah. And I said, and how'd that go? Well, I had to fix the code enforcement violation. It was 40, 000. I had to fix the code enforcement violation before I could refinance.
I go, that's the reason you should have all of these in separate.
Dan: Uh, Uh.
Joe: of investor, especially real estate investors from the beginning, they should at least be educated [00:35:00] and know that land trusts exist, know what LLCs are and how they exist and how they can be used.
Uh, Investors should understand the difference between a dealer and a non dealer. For tax purposes, because I, I talked to a lot of investors who go, well, I do some rehab and flips and I do some buying holds and, and I do some wholesaling and, and I go, and you're doing them all under the same entity. Oh no, I just do it all in my name. That's a problem. That's a big problem from a tax perspective. And I go into all that with them. So really from new investors up, but typically. Who we find get the best use out of our services is anyone who's got two and a half million dollars of positive equity and above. And the reason I say two and a half million dollars is because [00:36:00] most of our clients carry 500, 000 minimum liability insurance on their car.
That's your number one target. That's going to put a target on your back. You have a wreck. Number one, and then a lot of them carry a 2 million umbrella policy. So there's two and a half million dollars worth of insurance that will cover probably their biggest liability, which would be a car
Mike: hmm.
Joe: The more houses you own though, the, and hold the more liability risk you have with ADA violations and fair housing.
And we're starting to see a huge rise in that from tenants coming after landlords for. Fair housing violation and, and, and ADA violations, especially if anything you happen to own is commercial ADA, there are law firms out there, that's how they make their living. They have the boilerplate federal complaint.
They're [00:37:00] going to file it against you for not being compliant as a public accommodation. For. Tenants in residences. They have the same, they have complaints for that ready to go. And I can tell you right now, those are all federal cases. And if you're sued in federal court, you need to go ahead and set aside 25, 000.
Immediately, just to get your answer filed and a little bit of discovery done. 25, 000, that's where it starts when you hit federal court, and then it goes up from there. Most federal cases, or any state case that goes all the way to the Supreme Court of the state, you're looking at around a quarter of a million dollars in legal fees and court costs alone, and expert witness fees, and all that, at least.
Mike: Yeah. That's crazy. Yeah. Yeah. And the unfortunate.
Joe: the best thing is, so the best thing you plan to not look like a target where anyone looks at you and they go, well, this is all they got. There's no [00:38:00] insurance or there is insurance, but it's the minimums. So why bother, you know, why are we going to even bother going after this person? They don't realize that you have.
47 properties or 147 properties. They just see this one in this one land trust and it's done. Also for rehabbers, we've had people do rehabs and six months after closing, I get the phone call as the trustee that sold the property saying, Hey, you didn't disclose that there had been termite damage. You didn't disclose that the plant, that the septic tank.
Didn't work. You didn't disclose that the house was about to fall off the side of the hill. And I go, well, that's fine. You can sue us. We are the trustee. And the only asset we ever had was the house that you're sitting in. Good luck. You'll get a judgment, but it's not going to be worth anything. So rehabbers, especially, uh, uh, having them in their own pod, their own basket that gets sold and it's empty and there's no eggs left.[00:39:00]
That's the best route you can take if, if it's available to you.
Mike: I mean, it's like, you know, same concept as like a personal security system for your house, right? The point is not to catch the criminals, it's to stop the criminals from inquiring in your house in the first place. Um, so no, that, that's very cool. And so I guess just so people have context, you mentioned briefly before that they're cheaper than LLCs.
What does it typically take to set up one of these land trusts?
Joe: Well, for instance, in Florida, it's going to be between 275 and 600 at the inception. Depending on how much involvement we need to be involved with and what you're trying to do. For instance, in Florida, you can hide the purchase price at the closing. So it doesn't even appear on the records as to how much you paid for it.
That's a little extra. If you want to have successor beneficiaries built into the trust so that when you die as the beneficiary, it automatically passes [00:40:00] twos. Someone sort of like a revocable living trust does that's a little bit extra. If the title company we're working with has no clue what they're talking about or what they're doing, we may charge a little extra to deal with them because you've, you're working with a title company that's clueless uh, and ignorant about what, how it works.
Dan: Yep.
Joe: And then of course, you know, just to set up, but again, 275 to 600. Max is what you're looking at to set it up and get it going for LLCs. Typically with filing fees, you're looking at, well, you can always go on legal zoom somewhere like that and 99. They'll set it up for you. I still don't know how they do that, including the filing fees when the filing fee is a hundred. 50, but somehow they do that, but then they add on, add on, add on. So the average price I believe last I saw for setting up an LLC, including attorney's fees, including the filing fees is about 700 to 750. [00:41:00] So it is a little bit faster, a little bit cheaper to do the land trust. But the biggest thing is in Florida, at least it takes about a week to a month to get a land, to get a, an LLC. Set up with the state to get it registered with the state, depending on the time of year, early in the year, it's about a month, late in the year, it's about a week. In other states, that may be a day or two. With a land trust, it's just how fast we can kick it out. And if it's an emergency, it's within the hour.
We can set up a trust within an hour and it's done. It's ready to go.
Mike: That's crazy. And are there kind of like tax complexities that come with a land trust? Because that's the big thing with LLCs is now you have to report them all separately. Um, and your tax returns. Do you have to do the same with land trusts?
Joe: land trust is a completely disregarded entity for tax purposes. It's sort of like a single member LLC. The IRS just disregards it and pays no attention to it. So [00:42:00] whatever the beneficiary's tax situation is will be the tax situation there. So this is why a lot of people, a lot of our clients will set up one LLC for their buy and holds, one LLC for their flips, and then depending on what they're planning to do with the property, That L L C will be the beneficiary, but they use a different L, a different land trust for each property, and then it just passes through straight to those.
And then when we sell the property, we fill out the 10 99 information with the beneficiary's information. So it all gets reported straight on the beneficiary rather than on the trust. 'cause the trust is not a separate entity unto itself. The beneficiaries are the taxpayer as far as the i r s is
Mike: Yeah. Nice. And that's, and that's huge, right? And that's something that, you know, people listening, I want to really emphasize how massive that is, he just said. Because like, you're, you're talking about, you know, the people with all these properties and LLC. You know, you're kind of rolling your eyes. I'm sitting here feeling like [00:43:00] I got my hand...
I got caught with my hand in the cookie jar because I'm looking at Dan. I'm like, Oh, that's all the stuff that we do. But the, but the big reason is because setting up all these LLCs is a pain in the ass. It takes a while. It's expensive. And then our taxes are a fricking nightmare. Um,
Joe: Right, because I, I know, I mean, for myself, I know my CPA charges more to do a corporate return or an LLC partnership, or even a pass through return, uh, more than the individual return. I don't know why it just works out that way. the only other analogous structure I can think of that's very similar to how a land trust works in Florida or in Illinois or in Indiana would be the series LLC and just a few States have it.
I know Illinois has it, Texas has it. Um, I believe Wyoming has it, but the, the series LLC works much the same way where we, [00:44:00] where you set up one master LLC and then you. We've done it in Texas before, and then each house is owned in a separate L L C, but it's really just a series L L C that is a D B A of the main mothership, L L C, and everything flows through up to the mothership.
Another thing you can do, of course with LLCs, but again, you're having to set up a separate L l C in states that don't have the series L L C in states that don't have the land trust you're setting up. Uh, One LLC that acts as the member of all of your other LLCs. And then, but you're still paying that filing fee and annual tax fee or annual report fee for every year for every LLC you've set up to own each individual property.
And the only place where I've ever seen where that really works out is for large developers. Somebody who's a developer who may build an apartment complex that they'll have an LLC that only does that condo complex or that apartment complex or that office [00:45:00] building, but it's owned by it's a wholly owned subsidiary of another LLC that way when it's sold out, that LLC is.
Chucked it's done and gone, but again, it's, it's expensive to maintain and, and have that LLC there. Also, a lot of our clients do private placement memos, uh, for fundraisers, for, uh, buying multifamily properties. And those of course, are an LLC, uh, creation with special operating agreements for the private memorandum that's put out there for the investors.
However, we have actually had those. PMM syndication LLCs, and what they'll do is they'll go out and they'll buy multiple properties, but they buy each one in either depending on what they plan to do with it in a land trust or in another LLC that's wholly owned by the syndication LLC, but [00:46:00] all of that, again, is to separate those properties from each other and away directly from the syndication LLC, another one that's a pretty advanced technique, of course, or self directed IRA, uh, holders.
And beneficiaries, and we have a lot of those. We work with a lot of self directed IRA custodians all over the country. And those we always recommend do not hold the property directly in your self directed IRA. Have your self directed IRA be the beneficiary of a land trust that owns the property or set up a checkbook control.
IRA, LLC, and have that company buy the real estate and inside of other LLCs, depending on the state or inside of land trusts, depending on the jurisdiction and what's available to them.
Mike: That's awesome. That's fascinating. Yeah. There's so many different options and I appreciate you sharing all this. And you said that you're licensed in a handful of States, but do you work? Does that mean you only work with, uh, [00:47:00] Property owners that own properties in those states.
Joe: Yes. And well, and for land trusts, we, we're restricted only to Florida at this point because Florida has the statute. And that I've helped on the past, the, the last two amendments that that statute has gone through, I've been on the committee for the bar that's helped write those. So that was a hoot, but, um, we, we stick to Florida, some states like Texas, for example, to be a trustee of land trust, you pretty much have to be a bank and we're, we're just not going to go through that.
Brain damage to do that. Uh, so a lot of other states where land trusts may be used unofficially, there's a lot of workarounds you have to work with to try to make it work. Uh, what I think would be great is if more investors would lobby their legislatures to pass the Uniform Land Trust Act. 'cause there's one out there that has been, that's been written, it's just never.
Most [00:48:00] states just never get around to passing it. But I think if a lot of real estate investors got behind it and said, look, it's happening, people are doing it anyway. And we need a statute that regulates it and says, this is fine. If you're going to do it, this is exactly how it'll work. And this is how it'll be treated.
And I think that would solve a lot of problems in a lot of states for a lot of investors to make buying and selling properties faster and easier and cheaper for
Mike: Yeah. So I guess for us being in like Washington State, out of the different stuff that you outlined, what do you think would be the best sort of option for us to pursue?
Joe: If. Washington state allowed land trust, I'd say land trust. If they allow, don't allow land trust, but they allow series LLCs, I would start using series LLCs, looking at statute, making sure it's right. And if not, if they don't allow that, then you're stuck with forming an LLC. But have it as a pass through LLC and have your two [00:49:00] LLCs, your buy and hold LLC and your flipping LLC, your dealer LLC, and have it be the sole member of all of those, unfortunately, you're not probably going to get the anonymity, but you may not, you may not want to be too anonymous with your property holdings.
If it's you, because. Then anyone can step in to any title company and say, well, here's some more articles and here's the operating agreement and I'll sign an affidavit saying I'm the manager and I'm the owner and I'm going to mortgage this property or I'm going to sell this property. And if, if you're so anonymous that they can't really check the records and double check that what they're telling them is true, somebody could in effect, steal your property that way.
So that's one of the reasons we also pushed the third party trustee, because if we're the trustee And, and it's not too anonymous that anyone can just walk in and say, Hey, I'm, my land trustee, [00:50:00] um, here to sell this property, every title company can look us up and go, well, we're going to call the number and we're going to talk to the people at the office who we know are really them before we allow you to mortgage or sell this property or lease it.
Mike: So that makes sense. Awesome. Well, Joe, I really appreciate you coming on the show, man. There's a ton of incredible information in there. Um, and, uh, guys, I recommend you listeners go and give this one another listen through because he dropped an insane amount of knowledge in a very short period of time and also to, I've, uh, learned that I need to.
Do a little bit of reflection and figure out probably our, our anonymity and our
Dan: Me too.
Mike: a little bit. Um, but awesome, Joe. If people wanted to find you, follow you, reach out to you, what's the best way for them to do so?
Joe: Best way is just go to our website, mylandtrustee. com. And that has all of our information, lots of links, um, lots of media and information, just tons [00:51:00] and tons of information right there.
Mike: Easy enough. And I know we got a lot of, uh, Florida listeners and we got a lot of Florida, uh, I guess partners and, uh, members of our instant investor program as well. So you guys should definitely reach out to Joe, because he's going to make sure that you guys are taken care of. So Joe, well, thanks so much, man, for coming on the show.
We appreciate it. And, uh, thanks for listening, everybody. We'll talk to y'all next week.

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