Silent and Unrelated Co-Beneficiary
Equity Holding Trust™
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™, modeled upon the 100- year-old Illinois-Land Trust effectively serves to shield one’s real estate ownership from public view (‘i.e., in that only the deed to the 3rd-party trustee is recorded, while the identities of beneficiaries appear only in the trust document, which remains private and unavailable to any inquiring party, ‘absent a court order).
- Within the Equity Holding Trust™ (the EHTrust™) arrangement, the property’s title is temporarily vested, legally and equitably, in a ‘bonded and licensed, third-party, non-profit corporate trustee, which trust term can run for 21 years, or for the remaining duration of any underlying financing, ‘whichever may be greater.
- According to Title 12 of the US C 1701-j-3, transfer of one’s realty to an inter-vivos trust does not violate any lender’s “due-on-sale” admonitions.
- “Land Trusts” per sé (‘including the EHTrust™ model) are legal and wholly 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: thereby necessitating Foreclosure versus Eviction for the removal of a defaulting tenant-beneficiary. In other states, one’s properly vested trust creates “Use in Trust” versus “Use in Land allowing for simple eviction of an errant tenant-beneficiary.
- Note that even in La. and Tn. a qualified (i.e., re. IRC 163(h)4(D) the “land trust” beneficiary is entitled to full income-tax deduction for the expense of mortgage-interest and property tax.
- IN THAT ONE’S BENEFICIARY INTEREST IN AN EHTRUST™ IS PERSONALTY VERSUS REALTY, AND IN THAT PERSONAL PROPERTY IS NOT LEGALLY PARTITION ABLE… AND, ‘AS WELL.. ‘IN THAT ANY BENEFICIARY DEFENDANT IS NOT THE OWNER OF THE TRUST PROPERTY, THE TRUST ITSELF CANNOT BE DISTURBED, IMPEDED OR SET-ASIDE (ABSENT PROOF OF ILLEGALITY) AS A RESULT OF ANY BENEFICIARY’S LITIGATION, INCOME-TAX LIEN, CREDITOR JUDGEMENT, MARITAL DISSOLUTION OR PROBATE ACTION. ALTHOUGH OPTIONAL, IT MAY BE PRUDENT FOR ONE TO NAME A NON-PARTICIPATING, UNRELATED, CO-BENEFICIARY IN HIS/HER EHTRUST™ FOR THESE REASONS.
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Application of the Silent and Unrelated Co-Beneficiary Equity Holding Trust™
In that beneficiary interest in ANY trust is deemed personalty (i.e., personal property) versus real property (real estate), one might be well advised, when creating the asset-protective title-holding (land) trust to nominate someone (‘or a non-person entity) as an unrelated silent co-beneficiary. in order to best thwart future in-rem litigation (i.e., legal actions against the property vs. actions against a person, which are referred-to as “actions in-personam”).
In this co-beneficiary scenario, the trust is established for all the ordinary reasons (i.e., ‘primarily anonymity of ownership and deflection of future legal claims against the property by potential judgement creditors (who would not be able to discover a defendant’s financial interest in the property without a court order and deposition); however, the naming of a separate additional (wholly unrelated) Co-Beneficiary can serves the purpose of protecting the property from intrusion by a claimant’s in-rem litigation in view of the fact that co-owned personalty (‘which is the nature of one’s beneficiary interest in a trust or corporation) is—unlike real property—non-partitionable and not subject to a creditor’s charging orders: therefore, placing the trust’s corpus (property) reasonably beyond the reach of judgement creditors…’even including the IRS (i.e., ‘that is, assuming there would be no provable creditor-fraud, or verifiable collusion relative to an intent to avoid or minimize payment of income taxes).
One should carefully note here that use of the co-beneficiary title-holding trust does not fully protect beneficiaries against legitimate creditor claims when the trust is created “after-the-fact (i.e., following notification of the commencement of litigation)” and/or specifically for the purpose of committing Fraud upon a legitimate creditor. As well, the unavailability of in-rem actions not not preclude an action in-personam (‘against the defendant) in any legal action. Appointing one’s LLC as a beneficiary may have a positive effect in that the prperty is protected by the trusts and the LLC member is protected against (certain) limited liability by the LLC.
Although: the non-partition-able nature of ownership of a trust’s (personal-property) beneficiary-interest would likely prolong the process of litigation and greatly escalate a claimant’s court costs relative to its in-rem claim on the property, and could, hypothetically, create the potential for more onerous consequences.