LLC versus Business Trust

Investors often ask the best way to hold title to real estate. So they seek out real estate brokers, lawyers, escrow agents, online sources, etc.

Given our litigious society most investors are seeking three benefits:

• Asset Protection
• Limited Liability
• Income Tax Options

You can get those benefits with either of these organizations:

• Limited Liability Company – LLC
• Business Trust Company

But the internet changed everything!

LLC

LLCs are the most popular because they’re the favorite of lawyers and the Secretaries of State. They make them cheap to initially setup. The reason for this is because you exchange your personal details into a government database and consent to have the LLC data available on the internet.

You cannot setup an LLC by yourself. You need state government permission to grant a charter. They demand many filing forms upfront and annually. You might also pay franchise taxes for this government privilege. You must also maintain a registered agent who can accept legal service (lawsuit papers).

You will get limited liability and asset protection with an LLC. You can also keep your shareholders private. But your LLC registration itself is public information. Anyone can find your manager, mailing address, formation date and history along with your resident agent. This data is easily found on the Secretary of State’s website and the Internet.

And the County Recorder’s records will list your LLC on the deed of any property you own.

When using LLCs a smart thief has two government databases plus the internet to dissect your true ownership:

• Secretary of State Business Search
• County Recorder’s Database
• The Internet

Business Trust

Another form of holding title to investment real estate is with a Business trust. Long ago they were used for holding real estate because state statutes prohibited corporations from owning real estate. That’s why businessmen used them.

You do not necessarily need government permission to create a business trust. You might do it yourself. Operate without a resident agent. Get limited liability, asset protection and privacy for the beneficiaries.

If you operate a business trust without state registration they are unlisted on the Secretary of State’s Business Search portal and the Internet. So unlike LLCs there is no public database for Business Trusts. This is a huge advantage for those sensitive to cybersecurity for their assets.

And the County Recorder’s office will list your Business Trust on the deed of any property you own. But thieves have no cross reference to Secretary of State records.

Silent Ownership Transfers

LLCs members can transfer shares Use a realty land land trust for confidential transfers of any portion of the ownership interest without a recorded deed. For example, you can gift half shares to two heirs. Or you can quietly sell the entire interest to a buyer. There is no need to record a deed. Depending upon circumstances, this might give you an opportunity to prevent value reassessment and higher property taxes.

Personal Liens & Judgments

Personal financial problems such as tax liens and civil judgments of an LLC member can impact real estate. This is because they are the ‘legal’ owners. In contrast, the beneficiary of a Business Trust is not the ‘legal’ owner which means they are much safer.

Using a Trust (properly) smart thieves have a tough time dissect true ownership.

• Secretary of State Business Search – Unlisted
• County Recorder’s Database – Unlisted
• The Internet – Unlisted

Comparison Grid:

The way you get untraceable anonymity for a business trust depends upon language in the grant or warranty deed. How you do and how you do not fill it out makes a world of difference. These are little known secrets. Garden variety lawyers, real estate brokers and escrow agents have absolutely no knowledge or expertise.

	Asset Protection	Limited Liability	Privacy	Internet Anonymity	Resident Agent	Deed Secrets	County Recorder
LLC	Y	Y	Y	N	Y	N	Y
Business Trust	Y	Y	Y	Y	N	Y	N

Summary:

LLCs are easily found in the Secretary of State Business Search, County Recorder’s Records and the Internet

If setup properly, Business Trusts are absent from the Secretary of State Business Search, County Recorder’s Records and the Internet.

If you’re okay with having your real estate on the internet or dealing with government bureaucrats then use an LLC. If you prefer stealth, then use a Business Trust.

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