Discussion Forum

Wallace

Land Trust for CA property II

Saturday, January 23 2010 06:49 PM

Thanks for the explanation regarding naming your trust.

I'm in the process now of purchasing a multifamily building as a short sale here in CA.  

I wanted to know if you can give me some bullet items on what I need to do.  

As per your recommendation, I'll probably use a CA Land Trust since this is the first time I'm doing this.  Does CA have any laws stating that I must disclose all beneficiaries (like Chicago) if I get sued?  
Any other caveats pertaining to a CA land trust?  I already know about the 3 trust max per non-professional trustee.  

I'm using a local bank with a trust dept that'll allow my trustee to hold the mortgage as long as I am the guarantor of the mortgage.  That should be ok, right?

Secondly, I was going to contact one of your recommended CA trustee firms to have my property deeded to them first.  Then, I'll change the trustee to my brother-in-law.  He also lives in CA, unfortunately, but in a different county.  

Also, beneficiaries will be my NV LLC first and my living trust 2nd.  

Also, for me, the most complicated part is the insurance.  I watched the basic and advanced home study course, and there is extremely detailed discussion on getting your insurance agent to go along with this.  I'm still confused at what to ask them.  Can you give me some pointers?  I usually use State Farm as the insurance company for my CA properties.  

For property taxes, I'll just use my Land Trust name and a P.O. box to mail my tax bill.  Is there anything else to worry about?  

Lastly, you mentioned that rental checks need to be made out to the trustee.  Couldn't I just have my property manager make the check out to myself?  My PM will know my identity anyway.  For my other CA property, my PM simply direct deposits my rent money to my LLC's bank account.  I'm not sure if I want to go through the laborious process of having checks made out in the name of the trustee, but sent to my P.O. Box hoping that the my bank will allow deposits made to my trustee, or create a stamp of my trustee's signature.  

Thanks in advance.  I've learned quite a lot about land trusts in the past month.  

Wallace

REPLY

Tom
Trustee

Re:Re:Land Trust for CA property II

Sunday, January 24 2010 11:03 AM

You can view the California Probate Code at

http://www.leginfo.ca.gov/calaw.html

The sections Randy referred too are below, taken directly from the Probate Code, hope it is a help to you.

California Probate Code

15200.  Subject to other provisions of this chapter, a trust may be
created by any of the following methods:
  (a) A declaration by the owner of property that the owner holds
the property as trustee.
  (b) A transfer of property by the owner during the owner's
lifetime to another person as trustee.
  (c) A transfer of property by the owner, by will or by other
instrument taking effect upon the death of the owner, to another
person as trustee.
  (d) An exercise of a power of appointment to another person as
trustee.
  (e) An enforceable promise to create a trust.

15201.  A trust is created only if the settlor properly manifests an
intention to create a trust.

15202.  A trust is created only if there is trust property.

15203.  A trust may be created for any purpose that is not illegal
or against public policy.

15204.  A trust created for an indefinite or general purpose is not
invalid for that reason if it can be determined with reasonable
certainty that a particular use of the trust property comes within
that purpose.

15205.  (a) A trust, other than a charitable trust, is created only
if there is a beneficiary.
  (b) The requirement of subdivision (a) is satisfied if the trust
instrument provides for either of the following:
  (1) A beneficiary or class of beneficiaries that is ascertainable
with reasonable certainty or that is sufficiently described so it can
be determined that some person meets the description or is within
the class.
  (2) A grant of a power to the trustee or some other person to
select the beneficiaries based on a standard or in the discretion of
the trustee or other person.

15206.  A trust in relation to real property is not valid unless
evidenced by one of the following methods:
  (a) By a written instrument signed by the trustee, or by the
trustee's agent if authorized in writing to do so.
  (b) By a written instrument conveying the trust property signed by
the settlor, or by the settlor's agent if authorized in writing to
do so.
  (c) By operation of law.

15207.  (a) The existence and terms of an oral trust of personal
property may be established only by clear and convincing evidence.
  (b) The oral declaration of the settlor, standing alone, is not
sufficient evidence of the creation of a trust of personal property.
  (c) In the case of an oral trust, a reference in this division or
elsewhere to a trust instrument or declaration means the terms of the
trust as established pursuant to subdivision (a).

15208.  Consideration is not required to create a trust, but a
promise to create a trust in the future is enforceable only if the
requirements for an enforceable contract are satisfied.

15209.  If a trust provides for one or more successor beneficiaries
after the death of the settlor, the trust is not invalid, merged, or
terminated in either of the following circumstances:
  (a) Where there is one settlor who is the sole trustee and the
sole beneficiary during the settlor's lifetime.
  (b) Where there are two or more settlors, one or more of whom are
trustees, and the beneficial interest in the trust is in one or more
of the settlors during the lifetime of the settlors.

15210.  A trust created pursuant to this chapter which relates to
real property may be recorded in the office of the county recorder in
the county where all or a portion of the real property is located.

15800.  Except to the extent that the trust instrument otherwise
provides or where the joint action of the settlor and all
beneficiaries is required, during the time that a trust is revocable
and the person holding the power to revoke the trust is competent:
  (a) The person holding the power to revoke, and not the
beneficiary, has the rights afforded beneficiaries under this
division.
  (b) The duties of the trustee are owed to the person holding the
power to revoke.

Thomas K. Standen

REPLY