The Multi-Beneficiary Title-Holding EHTrust Transfer™
[Re. and Ownership Transfer from Property Owner
to Real Estate Investor – to Tenant Beneficiary,
While Conserving all Fee-Simple Ownership Benefits for all Parties]
The EHTrust Transfer™ (an EHTrust™ with two or more beneficiaries) is designed as a private and silent transfer of real property ownership benefits from one party to another. With the EHTrust Transfer™, when used in conjunction with am Assignment of Beneficiary interest and a Triple-Net Occupancy Agreement, home ownership benefits derived by an acquiring party are directly analogous to title ownership…but with effective asset protection in-rem (‘re. legal action against the real estate vs. against the person…i.e., “in personam”).
A BRIEF SYNOPSIS
- ‘The beneficiary-directed Equity Holding Trust Transfer™ has, for the past thirty-years, functioned flawlessly as a wholly legitimate and practical means for transferring the benefits of Fee-Simple real estate ownership, and is centered upon the 100-year-old Illinois-Type (“beneficiary-directed, 3rd-party trustee”) Title-Holding Trust. This trust structure serves very effectively to shield one’s real estate ownership from public view (i.e., ‘in that only the deed to the 3rd-party nominee (the trustee) is recorded in the public record: while only the unrecorded, privately held trust document contains the identities of the trust’s beneficiaries, and which document, remains unavailable to any inquiring party, absent a full court order and official deposition).
- Within the Equity Holding Trust Transfer™ (“EHTransfer™”), title to the corpus (the real estate) is temporarily vested in the third-party, ‘bonded and licensed, non-profit corporate trustee.
- “Land Trusts” per sé (‘including the EHTrust™) are legal and acceptable in all US states: ‘although in Louisiana and Tennessee, beneficiary-interest in any real estate holding device is perceived as Use in, and Ownership of, Real Estate vs. Personal Property (i.e., thereby necessitating Foreclosure, versus Eviction, for the removal of a defaulting tenant-beneficiary). In other states, one’s “Land Use” is, as per common legislation, Use in Trust versus Use in Land. (Note, however, that even in La. and Tn. a qualified land trust beneficiary is, under IRC 163(h)4(D), entitled to full income-tax deduction for the expense of mortgage-interest and property tax (see also Rev. Rul. 92-105).
- The temporary transfer of a property’s ownership to an inter-vivos trust does not violate any lender’s alienation (“due-on-sale”) admonitions (i.e., see 12USC1701j-3).
- The Equity Holding Trust Transfer™ does not compromise any provision of the recently established Wall Street Consumer Financial Protection Act re. Seller-Financing (i.e., the “Dodd-Frank Act”): this is despite the fact that virtually 100% of all benefits of fee-simple ownership are being conferred upon the acquiring party (i.e., ‘without a title transfer to, or formal loan-assumption by, that party).
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Application of the Equity Holding Transfer™
The objective of this technique is for an owner of real estate to ethically and legally impart ownership and/or investment benefits to one or more acquiring parties, without the necessity of new mortgage financing or any particular bank-imposed credit requirements or restrictions. The Multi-Beneficiary EHTrust Transfer™ has, for over twenty-five years, comfortably and safely allowed investors and full payout lease-tenants to benefit from the Fee-Simple benefits of real estate ownership (‘including tax deductions) merely by being named as bonafide co-beneficiaries with specific duties in a carefully documented and properly constructed real estate trust arrangement.
Please note that the program explained does not violate any mortgage lender’s due-on-sale admonitions (re. 12USC1701-J-3); nor does it compromise any facet of the recently introduced Dodd-Frank, Wall Street Consumer Financial Protection Act. The reason for the system’s avoidance of such governmental regulations lies in the fact that, even though all ownership benefits are passed from a qualified owner to an acquiring party, is that the structure of the EHTrust Transfer™ does not involve the sale, purchase or mortgage financing of real estate. Neither does the documentation involve an option to buy real estate; or any extension of credit. There is no involvement with any section within the Federal Truth-in-Lending Act (TILA); the Homeowners Equity Protection Act (HOEPA); the Real Estate Settlement Procedures Act (RESPA; or the Fair Credit Reporting Act (FCRA).
The entire system ,despite all of it’s features, benefits and advantages is essentially no more than the lease of a property from a trust (‘not wholly unlike leasing a property from a corporation, ‘except that letting of the property by a corporation cannot provide income tax benefits, avoidance of federal regulations, safety, acceptability or convenience of transfer™ .
WHAT HAPPENS AT INCEPTION:
- An owner’s property is vested in (deeded-to) a fully licensed and bonded third-party corporate trustee, whereby the owner of record becomes the sole-director of the trust with full power of direction of the actions of the trustee, and all responsibility for the property’s management maintenance and ultimate disposition.
- An Investor-Co-Beneficiary (‘an acquiring party) is assigned a beneficial interest in the trust (from 10% to 90% of such interest)
- A Resident Co-Beneficiary (‘a party who will live in the property, covering all costs) is assigned a 3rd beneficial interest in the trust (‘i.e., in any percentage the Investor Beneficiary would choose to relinquish)
- A Beneficiary Agreement (‘analogous to a Partnership Agreement) is executed by and between all parties, identifying each beneficiary’s rights, privileges and responsibilities.
- The property is then leased to the Resident Co-Beneficiary (‘by means of a Triple-Net, All-Inclusive Occupancy Agreement), whose payment obligations include: mortgage-principle and interest, maintenance, and pertinent property taxes and insurance premiums (‘and HOA dues if applicable)
- All payments and disbursements, and payment-record-keeping responsibility is turned over to a bonded collection service that is provided and funded without charge by the trustee entity
WHAT HAPPENS AT TERMINATION:
No less than six-months prior to the trust’s scheduled termination date, the Resident Beneficiary (#3) is given the first right purchase the trust property at it’s then Fair Market Value, minus any moneys owed to that party by the Trust at the time of purchase
The Investor Beneficiary (#2) has the second right to purchase the property under than same parameters as the first
The third right to purchase goes to the First Beneficiary (#1) who needs but take the property back and place it on the market for sale, or deal with it in any other manner that he/she might choose.
When the property is sold on the open market or purchased by a trust beneficiary:
- First all encumbrances are retired (paid-off)
- Then all costs of re-marketing and sale (or other disposition) are covered (e.g., escrow, title, commissions, etc.)
- Next, each beneficiary receives a refund of any initial non-recurring expenditures having been paid-in at the trust’s inception
- And at the end, all net proceeds from the sale are distributed to each beneficiary in proportion to his/her respective percentage of beneficiary interest having been held in the trust.
In this unique process, the referenced Home Ownership Benefits that accrue to the Resident Beneficiary include:
- Unimpaired Land Use
- Full Use Occupancy of the Property
- Quiet Enjoyment
- Income Tax Deductibility (re. Mortgage Interest and Property Tax)
- Economic Appreciation Potential
- Equity Build-Up from mortgage principal reduction
- The right to let or sublet (i.e. lease or sublease)…’or to vacate the property at the trust’s termination (‘or sooner if all parties are in agreement)
- (Perhaps most importantly) Pride of Ownership.
It should be understood as well that even though virtually 100% of all benefits of real estate ownership are being passed from an owner-of-record to another party, the EHTrust Transfer™ does not constitute any of the following:
- A sale of the real estate,
- A purchase of the real estate,
- Creation of a mortgage or extension of credit,
- An option to buy and a reduced or adjusted price,
- An Executory Contract,
- A contingency sale of the real estate,
- A disguised security agreement, or equitable mortgage
- A partnership, corporation or business trust.
For additional information, contact ODWM at 800 409 3444
The Equity Holding Trust Transfer™ (i.e., the EHTrust Transfer™) includes two or more participating beneficiaries and an appointed corporate trustee that holds the property’s legal and equitable title for a stipulated term, follwing which the arrangement is terminated and the property is deeded to whomever the beneficiaries designate as the new owner.
- The Settlor Beneficiary – ‘the owner of record (the Non-Resident primary Beneficiary )
- An Investor Co-Beneficiary – ‘a party acquiring interest in the trust for investment purposes (a secondary Non-Resident Beneficiary )
- A Resident Co-Beneficiary – ‘a party appointed by the trust’s existing beneficiaries, who will live in the property under a triple-net occupancy (lease) arrangement, and be responsible for the property’s maintenance and expenses (‘principal, interest, insurance, property tax, association dues, upkeep and repairs)
- The Trustee Nominee -‘ that title-holding entity that is a bona fide non-profit, charitable 501c third-party corporation, acting solely for the benefit of its members (‘which members are the beneficiaries of all trusts held by the trustee)
In the Equity Holding Trust Transfer™ the property-owner-of-record, acting as the trust’s settlor and primary beneficiary, may, with regard to his/her property, do one of two things…’either:
- He/she may appoint a Resident Co-Beneficiary in the trust ‘who, in exchange for all rights, privileges and benefit of real property ownership, will occupy the property, being given from ten to ninety-percent (10%-90%) of the trust’s overall beneficiary interest. It is this percentage of beneficial ownership in the trust that serves to determine each beneficiary’s proportionate share of net profits to be gained at the trust’s termination, ‘upon disposition of the property (i.e. by sale or re-finance).
- The property’s owner-of-record (as the trust’s Settlor) may appoint an investor as a co-beneficiary, to be referred-to as the transaction’s Investor Co-beneficiary. This party agrees to accept all responsibilities for the property’s payment, taxes, insurance, etc.: but then appoints a third person as the trust’s Resident Beneficiary, who, in exchange for all rights, privileges and benefit of homeownership, agrees to live in, and assume all responsibilities of, the trust property: being thereupon granted a percentage of the trust’s beneficiary interest (i.e., ‘from ten to ninety-percent), which percentage becomes that party’s stipulated share of net profits to be earned upon the trust’s termination and disposition of the property (i.e. following sale or re-finance).
COMPATIBILITY W/FEDERAL REGULATIONS AND ADMONITIONS
The EHTrust™ Transfer (At one time known as the NEHTrust™ & PACTrust™) is wholly compatible with all existing regulations that would/could otherwise negatively affect, or be otherwise regarded as being opposed to, “Owner-Financing.” This to say that, although the benefits are the same or superior to a standard deed transfer, the EHTrust Transfer™ does not constitute a violation of any lender’s due-on-sale admonitions (See FDIRA 12USC1701j-3): ‘nor is there a compromise of recent Dodd-Frank Wall Street Reform and Consumer Protection legislation (See Pub. Law 203, 111th Congress).
Documentation preparation is handled by the scrivener services of Open Door Wealth Management, LLC a Nevada Limited Liability Company, under the direction of, and oversight by, Attorney Maurice Kempner, of Kempner and Associates, Camarillo, California.