TRUST STRATEGIES RANDY HUGHES Because of their low profile, Land Trusts are very useful for (off the radar) real estate transactions. The following ideas are merely suggestions that you might consider. Be careful to think through all the ramifications before engaging in these concepts. If you want to borrow money conventionally and you will use a deed to real estate as collateral for the loan, you will have to give the lender the full deed. In other words, you cannot divide a deed real estate with $100,000 of equity could use some of its shares (but up into pieces no matter how not all of its shares as is required by a personally held deed) as much you are borrowing. For collateral for a $10,000 loan. With a share value of $1,000 there would example, if you owned a parcel be 100 shares. of real estate in your own personal name (your name is on The beneficiary of the Land Trust could “temporarily assign” 10 shares the deed), with $100,000 of for a $10,000 loan. This would leave 90 shares unencumbered that equity and you wanted to borrow could be used for future financing. The flexibility of using a Land Trust only $20,000, you would have to far exceeds the standard method of title holding. collateralize that deed in full. In other words, you would have to In another scenario, assume that two real estate investors have owned give $100,000 of equity to their properties (of similar current market value) inside Land Trusts for secure only a $10,000 loan. 30 years. Both investors are “out” of depreciation. Neither investor wants to conventionally sell their properties and incur huge capital The Land Trust can be used to gains. solve the problem of over collateralizing a loan. The Once again, the Land Trust trots in for the rescue. Each investor beneficial interest of a Land (beneficiary of the land trust) sells the beneficial interest to the other on Trust can be divided into an installment sales agreement. The terms are nothing down, interest unlimited shares. Therefore, a only (no capital gain to report) and a tenyear balloon (enough time to Land Trust holding a piece of figure out what to do next).