Land Trust, IRA, LLC, Entity Structuring, and Asset Protection Questions and Answers

Craig Longsderff: So I’m clear Ron, I own a free & clear 3-family titled to my IRA Equity Trust custodian, You’re saying don’t do that? Thank you.
Never. Now your IRA is liable for anything happening to that property.

William Spicer: If you have a free and clear family property that has dual owners due to inheritance and you place in a Land Trust, should it be placed in an within LLC?  Beneficiaries would be children of trustees
I’d make each child a 50% beneficiary of the trust.

A Hill: Who should the beneficiary be in trust? individual or entity? Percentage? Also, at closing attorney wants a property manager listed…should I use a (personal name or entity? What should it be?
I’d make the beneficiary an LLC 100% and the property manager should be in Entity an LLC manager should be a person

John Noble: I thought Roth IRA required 5 years before tax free, true?
You thought wrong it’s five years before there is no early withdrawal penalty 10%

Scott Williams: My self-directed IRA bought and rehabbed a house with tax deterred $$ and is now listed for sale. Am I facing UBIT tax wen sells in addition to income taxes later?
You pay taxes only once but you didn’t tell me if there was a loan on it. If there is no loan, there’s no UBIT.

Antonio Colon: Who is the best trustee person or LLC?
One of your own entities.

Victor McIntyre: If I transfer title to land trust, who makes the mortgage payments?
You do, from whatever entity is collecting income and reporting it.

Joyce Goodman: How scared was Ron when he did his 1st transaction?!!
Sxxtless.

Faye Dawkins: I would like to transfer my current residence to a Trust. Do I need to notify the mortgage company?
No, it does not affect your mortgage.

Susan May: Clarifying… UBIT is NOT triggered if the house is paid off for at least one year before selling?
Correct.

Craig Longsderff: If I own my 3-family free & clear in the IRA, is it a good idea to borrow a non-recourse loan to by another property & is that a taxable event? Thank you.
The minute your IRA borrows money it becomes taxable upon sale. You don’t need money to buy more property, you need proper training.

A. Hill: Should my IRA LLC be different than my day to day LLC that I use to run my house buying business?
Absolutely, there better not be any connection whatsoever.

Steve Ayres: How long need to own IRA before pull out with no taxes?
Age 59 1/2.

Michael Conley: Can you buy money judgments in your IRA?
Yes.

Tony Pearl: If someone makes more than $200k/yr from a job, can they still make a Roth IRA & do business the way you’re recommending?
Absolutely. You must first open a traditional and then transfer that money to a Roth. Don’t forget you will pay taxes on the amount you transfer. But the key is to have a Roth to grow, it’s irrelevant the taxes you pay on the small amount of money you’re transferring. I do a few thousand dollars because you cannot contribute to your Roth as long as you remain in this high income bracket.

Faye Dawkins (Jacksonville): What if they have turned 18? Can I set up a Roth for them?
You can set up a Roth at any age, but a CESA prior to 18. A regular Roth is not an educational IRA and you cannot pay educational expenses from it.

Jerry Ladd: What do you invest money inside your IRA while looking for other real estate to invest in? Should you invest it in a money market acct. so it is available to buy house when ready?
Yes, or a mutual fund.

Bruce Best: My son is 28 years old and is intellectually disabled. He has a Special Needs Trust. We are in the state of Texas. Am I able to establish an IRA for him in his Special Needs Trust?
His trust has nothing to do with it. An IRA is an individual thing, no entities.

Chris Fiala: Can a CESA be put into an IRA after age 30?
No, a CESA is it’s own account for a child under age 18 to open, but can be used until age 30. You can’t take the money from it and put in an IRA but you can make a $6000 annual contribution the year the child gets the money.

Joyce Sells: Opened CESA through trust company. Then they said 18 year old grandson owned it and refused to talk with me about it. Was that legit???
If you opened it, you’re the customer custodian and should be able to talk about it. I’d move it if you can’t get cooperation. I know of no rule where a parent can’t discuss their child’s CESA.

David Williams: How can I open a Roth IRA if I receive tax free stipend money and do not have taxable income?
Open an LLC and pay yourself a salary enough to cover your contribution to open the Roth. Once you get it open you can fire yourself if you wish. The key is to get it open so you can use it for earnest money deposits to buy houses. You only have to open one, even if you never make another contribution

Hannah York: When you die, what happens to your Roth?
The beneficiary you name inherits it. I’ll be the beneficiary if you like.

Michael Mileykovsky: Can my partner and I open Roth IRAs for each with different $ amount, contribution and form one LLC which will buy properties under trust?
You can have two IRAs owning one LLC but I’d check with your custodian, because this can become ticklish. The amount you put in your IRA is irrelevant in this situation.

Chris Fiala: Does Social Security qualify for earned income?
I don’t think so. Check with Quest.

Pas Sor: Isn’t rental income NOT considered EARNED income for Roth contribution purposes?
I don’t think so but earned income is easy. Just have the entity pay you a salary.

Ralph Robinson: If my parents are in their 70s, and I open a Roth for them and do deals in the Roth. When can they pull the money out?
Anytime they want, except there is a 10% early withdrawal penalty until the Roth is five years old, however, no taxes.

Mary Masters: How do I get the LLC into the Roth IRA? With an investment amount from the IRA?
You read the instructions I furnished you until you understand them. You don’t get an LLC into a Roth, you form an LLC that your Roth owns.

Joyce Goodman: So I go to Edward Jones & request a Roth IRA? I can transfer my funds into there?
You can, but nothing I taught you would apply because they are not a self-directed IRA company and will not allow you to make your own decisions unless you invest in their stocks. Use Quest who understands what you’re doing.

Horace Broadnax: My mother has a traditional IRA, she is retired and no longer works , can she convert this IRA into a Roth IRA? She is over 75 years of age.
Yes, if she’s willing to pay taxes, which may not be any if she doesn’t have income.

Horace Broadnax: Your presentation on an LLC bEINg the owner of an IRA, should you leave some money in your Roth with your TPA? Do you still need the TPA once you have created the LLC that owns the IRA?
Yes, and yes. You will always need a TPA as long as you have a Roth and I always leave some money in it.

Hussain Shah: When take out money than put it back to IRA loose profit on this money?
You can take out your contributions without any penalty. You can’t put it back, except for a $6000 per year contribution.

Michael Conley: If I buy property for 40,000 but only have 20,000 in my IRA and borrow the other 20,000 from lender, then sell, is 100% of my profit going back into my Roth tax free since I borrowed 50% of the money from a non-IRA lender?
If you borrow any money on the property it is subject to UBIT.

Audrey Fraser: Is deferred comp. considered the same as an IRA? And can I use this money to buy houses the same way as a 401K?
There is nothing that is the same as an IRA. You can only use your 401(k) if you can write checks on it.

Sherril Dormaier: Can you put a home with a reverse mortg. Into a land trust? What happens when the person who took out the mortg. passes?
Yes, you can and don’t need the bank’s permission. If the bank finds out the person has passed, they make all the laundry assuming both husband and wife are gone.

Lee Ann Smith: When I put the house I’m living in in a land trust who does my aunt whom I take care of pay rent to? Also, I have multiple farms. If I put each one in a land trust, who does my tenant pay?
Whomever you instruct them to pay.

Lisa Byrnes: I would like to open a Wyoming LLC . Do you know of a good Wyoming company to handle the paperwork?
Go on the Wyoming state website and fill in the forms your self. You’ll have to answer the same questions even if a company does it for you.

Michael Conley: Will you provide details and/or info on how to set up an LLC that owns my IRA and setting up a bank acct EIN # ( So we know that we have done it rite)?
Already have, read the instructions I sent you.

Melton Faircloth: Ron said Florida has a state Tax. %1/2 percent Is this sales tax or state tax? Florida does not have a state tax. Right?
There’s a 5.5% income tax on your net earnings in a C corporation in Florida

Emilio Alvarez: Florida. How do you lease a vehicle under a Personal Property Trust?
You don’t, the leasing company owns it so there’s no need for a personal property trust

Sherry English: If personal home is tenants by entirety – can credit card debt judgment of one spouse still be made against the TBE home even though they can’t force sale of house to pay debt?
No. A judgment against one will not attach to our house.

Lee Ann Smith: Do I have to open an LLC in the state I live in? ie Texas has no income tax.
You can have an LLC in any state and own property in any other state. However the state you do business in will probably want their taxes regardless of where the property is. If you have a Texas C corporation you probably won’t pay any state tax on the gain.

Emilio Alvarez: Florida. Do you recommend one LLC own each other for privacy reasons or would you advise against that? There are companies in Florida that do a Double LLC, Anonymus Florida LLC?
Your question does not make sense to me.

Linda Jefferson & Minervo Chil: Is there any reason to own an S corporation?
Usually S corporations are used by professionals like CPAs and attorneys.

Michael Irvine (Montana): I closed property in land trust and title company demanded the Trustee’s Social security # or EIN # or they would not close. Is this normal?
It’s not normal and it’s not required. Your attorney might have to point this out to them. Change title companies.

Jerry Holloway: Jerry is there better state for estate taxes?
Nope, estate taxes are federal.

Mattie Tatum: What does he think about us having checkbook control for an IRA?
I think it’s only a matter of time when you’re going to have to answer to the IRS code which is pretty clear you cannot write checks on your own IRA.

Mattie Tatum: On Ron’s Possible Asset Protection Structure chart/information that he provided, he has notes under column C – Keeper.  Many RE gurus that have note buying courses state that notes can be purchased in an IRA. Why does Ron think differently?
They certainly can but that doesn’t mean the IRA should take title to them on public records. Use a paper trust and make your IRA the beneficiary.

Mattie Tatum: When does he recommend a Roth Solo 401-K over a Roth IRA? (Stone Mountain, GA)
If you have a company you can have them both. A 401(k) allows you to make a much larger contribution and you can borrow money from it, and you can’t from a Roth.

Mario Fenner: How do I inform the IRS that I want my LLC to be taxed as a C-Corportation (what form do I fill out)? Thanks, Mario.
You don’t, you check with your CPA first and let him do it if he improves. There are tax consequences that need to be discussed.

Robert Chang: Do you have sample forms for the different estate planning trusts you have discussed about (namely Living Trust, Life Insurance Trust, Wills, Pour Over Wills, Living Wills and Charitable Remainder Trust)?
No, they will vary from person to person and you should never use a sample form for these.

Fernando Diaz: What parties are included in the trust agreement? Grantor = Seller, Beneficiary = LLC A ,Trustee = LLC B.
LLCA is the beneficiary, not the trustee and any of your other LLCs can be the trustee because it doesn’t handle any money.

Clark Schiller: How do you transfer property from B to C?
You do it internally if the property is in a land trust because nothing changes at the courthouse. It should have a closing statement for each entity and alert your accountant what you have done. You were assigned beneficial interest from B to C and put it in your file cabinet and make the bookkeeping adjustments.

Mercedes Quintanilla: Can you please explain what you said about the life insurance trust? What is that for? When is use it for?
The beneficiary of your policy should be a trust, thus removing it from your estate and the state taxes and its not attachable by any creditor.

Mercedes Quintanilla: Please email me the name of administrator/custodian you mentioned on the webinar, it was Quest IRA? Not sure, please confirm.
You are correct, add a “.com” and you’re there.

Mercedes Quintanilla: My sister owns a property in a land trust, can I (with my Roth IRA) pay her a lease option fee to do a sandwich lease option? Would that be a legal transaction using my Roth IRA?
Brother and sister can do business.

Andrea Hodges: Hello, I’m a Masters student and am still with Equity Trust for my IRA. Wondering if there is a discount for opening an account with IRA custodian Ron is using?
You’d have to ask them.

Shraddha Chandwadkar: We have properties in my husbands self directed IRA but no LLC or LT at this time for those. Can we still be able to set up the LTs and LLCs for those properties?
Yes, if they are titled to an Aire they must be deeded to a land trust and the land trust should be owned by an LLC that is owned by your IRA.

John Noble: For my personal house Land Trust, do I make an LLC to be the beneficiary? Who do I put on the LLC?
Your personal house need not have anything to do with an LLC. Make you the beneficiary.

Jerome Zebrowski: When buying a home in Trust, either by XYZ LLC or Self Directed IRA. Do you put as buyer XYZ LLC “TRUST” as buyer. Or  “1234 Park Ave” Trust as buyer.  Same for Self directed.
Trustees name must show on the deed or you will have title problems.

John Noble: Where did Ron say we put this statement: “The beneficial interest of this trust resides in the home as their personal residence.”
Under the legal description on the deed.

Les Worsham: Fantastic seminar. Quick question. What are your thoughts of incorporating in a state that does not disclose public record of ownership of the corp. , for privacy reasons.  ie Nevada
I love them. But don’t forget your state will want its taxes due.

Lee Covert: I’ve heard that a personal property trust can be a member of an LLC. Is this true? If yes, would you recommend it? Why or why not? If yes, can the trustee of a personal property trust that is a member of a multi-member LLC also be a member of the MMLLC? As a member of a MMLLC, I would assume that a personal property trust would need to have a bank account in order to make a capital contribution to the MMLLC, correct?
This one could be answered in three pages, cannot do it here.

Phil Short: Just to make sure……I sign the purchase contract as my LLC but have the attorney close in a land trust with my LLC as manager.
Make the buyer your LLC as trustee, you sign as manager.

Phil Short: “UBIT” is a new concept for me. I understand that a lease purchase from the seller does not trigger it. I did not understand the exemption if you purchase the house. It was something to do with the timing of the sale…@ 1 year?
If the debt is paid off one year before the sale, UBIT will not apply.

Mark Kapsky: If I deed my personal residence over to a land trust, should the Trustee be an LLC I control (and my ownership interest discoverable) or an individual?
Your LLC is the trustee and you on the trust. Ownership is always discoverable but that doesn’t mean they will get your asset. Much longer discussion required on this.

Mark Kapsky: How does using a Lease Option to acquire a house in my IRA avoid the UBIT?
There is no debt, a lease option is not considered debt.

Linda: Who should be the manager for the LLC owned by IRA? I hear you said anyone besides me, or my children, who do you think is the best for this position?
I can only tell you who can’t be. Anyone else can. Your brother or sister included, friend, relative.

Linda: I plan to buy a new construction house as my personal residence. If I want to title the house to land trust, the closing attorney will need to see the trust agreement. Should I show him the “Agreement and Declaration of Trust”
Yes.

John Noble: Can I get a filled out Warranty deed to trustee and the Agreement and Declaration of trust with some generic names like ABC LLC? I still don’t understand how to fill in the blanks. Also, I am in Texas so I need the Texas version. I have in some notes from months ago that in Texas, an individual is required to be the Trustee. Is that true?
Filled out versions come in my courses and my Boot Camp. Texas does say an individual should be the trustee. I would still make an entity the trustee. Your decision.

Bruce Cavaretta: On the warranty deed to trust, where does the trust number come from?
I use the house number.

Bruce Cavaretta: If I change the trustee, I assume the deed needs to be updated, is that correct?
Should be. The best way is a quit claim deed from one trustee to another record it.

Bruce Cavaretta: Ron said the owner of the IRA cannot have direct control of assets in an IRA, later Ron said his LLC D is trustee for the land trusts in his IRA. Would this be direct control?
The land trust has no money and the trustee never touches money. I don’t believe there is any conflict.

Bruce Cavaretta: Wouldn’t it be better to add an LLC E, use D for harm’s way functions listed and move trustee to E?
I don’t see the need. Don’t you think four LLCs are enough?

Stephen Braun: I am soon to lease a new business vehicle. For liability purposes, how best to title and insure?
There is no title if you are leasing. You don’t own it.

Donald Wong: Beneficiary of a Land Trust — LLC?  Not the individual owners (i.e. Husband and Wife)? Trustee of the Land Trust:  The “Utility” LLC?
There’s no question here.

Donald Wong: Just to be sure I am interpreting correctly: For my existing properties I own Deed them into a Land Trust – One property per Land Trust 3 rental properties- 3 Land Trusts The beneficiary for each of the 3 Land Trusts- 1 LLC (i.e. same LLC for each of the Land Trusts- Yes?  [In other words, not a different LLC for each of the Land Trusts]
Correct.

Donald Wong: Our home is currently on title in our Living Trust Per Simulcast today, deed Living Trust to a Land Trust BUT, do not use a LLC as the Beneficiary?! Did I hear correctly? If so, why? Then, for our personal residence, the beneficiary on the Land Trust is the names of the owners (i.e . myself and my wife)?
Have a living trust deed to the land trust then make living trust the beneficial interest. You can be the beneficiary of the trust that owns your residence.

Donald Wong: LLC- state specific?  Can one set up a LLC in another state that is less costly?  Will LLC still provide asset protection if an out-of-state LLC?
Yes, the protection is state-by-state.

Donald Wong: How do the real assets tie into the living trust?
You’re living trust may contain all of your assets. This is a conversation you must have with your attorney who set up your living trust.

Donald Wong: I reside in California.  My investment properties are in California.  But, the CA Franchise Tax Board charges a minimum of $800 per LLC.  It is significantly cheaper to get an LLC out of state-  eg. in Nevada or Wyoming. Should I get an LLC outside of Calfornia (say in NV)?  Would I risk losing asset protection for a California property if an LLC is out-of-state?
This would require a discussion with your attorney with a lot more facts present.

Donald Wong: For an AB Living Trust, assuming the husband passes last. ;  at that point it split into 2 trusts.  The husband trust is now called a By-Pass Trust. In the Simulcast, I do not know if I heard correctly but the husband’s By-Pass Trust should be transferred into the Life Insurance Trust (assuming there is a Life Insurance Trust)?
You have great questions but only your attorneys can answer these.

Donald Wong: On the Estate Planning Chart, there are two Personal Property Trust entities- one for safe asset and the other, for unsafe assets. Why the separation?
Do you really want your automobile in the same entity as your stocks. Your car is a deadly asset, keep it away from Safe assets.

Donald Wong: All the land trusts, LLCs, C-Corp, Personal Property Trusts that are created, how are they referenced in one’s Living Trust?  Just have an addendum in the Living Trust and list all the entities OR list the individual real properties and personal properties?
For your attorney to decide.

Donald Wong: I live in California.  Do I use a “Grant Deed” rather than a “Warranty Deed” to deed each of my existing properties into their individual Land Trust?
Grant deed to trustee in California.

Donald Wong: From the “Possible Asset Protection Structure” chart, it appears multiple land trusts can be in one LLC.  It is definitely more manageable- less paperwork, filing, check book, etc, not to mention cost effective by not having to pay annual fees for multiple LLCs. Can a LLC be sued and if there is a judgement, would it tie up all the rental income from the various properties?   Should each property has it own dedicated LLC?
Look at your chart I gave you. One house, one trust. If there’s an attack it will be on the trust that owns the house. From a creditor’s point of view the LLC doesn’t even exist. It’s the owner of the trust and has no liability

Joe Roach: I asked a question about revoking the property from trust today and you answered it, but I have a special situation I think. I bought a house subject to for $149,000 that is worth $327,000 with $1,150 monthly payment. It is such a nice house, I decided to move into it. The husband (seller) is in bad health. If they put it in a trust and I become the beneficial owner, what is to keep the wife from taking the house out of trust after he dies.
The only way to put it in a trust is for them to deed it to your trust, after which they have no control over the house.
Or if he goes into a nursing home, It would still look like they own it in trust . I am concerned the State of Arkansas would try to liquidate the house before Medicaid would pay for his care. I have $178,000 equity in this.
No it wouldn’t because it’s been deeded to your trust, out of their name.
I want to do all I can to prevent losing the house. I cannot qualify for a mortgage at this time.
Get the deed out of their name and you are protected.
The wife went along with the sale but was unhappy and one of the daughters is mad that I bought it for what they owed.
Tough.
If we can take a house we own out of trust, what prevents the Grantor of the house mentioned from taking that house out of trust?
Because they are not the beneficiary anymore.
I have bought several houses recently subject to and would like to nail this subject down. A trust attorney in my town said that revocable means revocable in all cases.
Then he didn’t understand your question. I’ll say again, they can’t take back that which they do not own.