Can a Trust Prevent Foreclosure?
Full Question:
Answer:
If the foreclosure process has already begun, creating a trust will not stall the process. Generally, assets in a trust that is irrevocable and which the debtor is not a beneficiary are less likely to be subject to creditors' claims in bankruptcy than those in an irrevocable trust in which the debtor is a beneficiary. I suggest you consult a local attorney who can review all the facts and documents involved.
Transfering assets right before filing bankruptcy may throw up red flags for examination.
The elements of a fraudulent conveyance transfer are defined as follows by the Uniform Fraudulent Transfer Act:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that he [or she] would incur, debts beyond his [or her] ability to pay as they became due.
Bankruptcy Code section 548(e)(1) provides:
In addition to any transfer that the trustee may otherwise avoid, the trustee may avoid any transfer of an interest of the debtor in property that was made on or within 10 years before the date of the filing of the petition, if –
(A) such transfer was made to a self-settled trust or similar device;
(B) such transfer was by the debtor;
(C) the debtor is a beneficiary of such trust or similar device; and
(D) the debtor made such transfer with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made, indebted.
For further discussion, please see:
http://www.abiworld.org/committees/newsletters/litigation/vol5num4/Bankruptcy_Lit_June_2008_Asset%20Protection_Ostrow_Article.pdf
A land trust aims to protect the lands and waters that define our communities and enrich our quality of life. A land trust may accomplish this through establishing and monitoring permanent conservation easements. Conservation easements are legal agreements by which landowners voluntarily limit the development potential and use of their land. The land remains in existing ownership but the easement "runs with the title" insuring that the protections remain in place regardless of who may own the land in the future.
A land trust works with landowners to protect the natural values of their property and ensure that the scenic beauty of the area will be maintained for future generations. The protected property may be donated by land owners, or the trust may purchase property. A land trust's legal and real estate specialists work with landowners, government agencies, and community groups to:
•create urban parks, gardens, greenways, and riverways
•build livable communities by setting aside open space in the path of growth
•conserve land for watershed protection, scenic beauty, and close-to-home recreation
•safeguard the character of communities by preserving historic landmarks and landscapes
•generate federal, state, and local conservation funding
•promote the importance of public lands.
Another type of land trust is allowed in some states. It is a revocable, living trust primarily used to hold title to real estate for privacy and anonymity. The owner of the land can transfer title to a land trustee and specifies who will be the beneficial owner and who will have the power of direction over the trust. The beneficial owner has the right to use the land. When real estate is held in a land trust, however, only the land trustee’s name is made public – not that of the trust’s beneficiary. Unless forced to do so by a court order or statute, the land trustee will not disclose this information to anyone.
The holder of the power of direction has the right to instruct the trustee in title transactions, such as directing the trustee to transfer a deed or mortgage to someone. Typically, the beneficial interest and power of direction remains with the original owner. Unlike a regular trustee who acts according to the rules set forth in the trust, the land trustee acts only according to the direction of the holder of the power of direction.
A real estate investment trust (REIT) is a corporation whose primary business is owning, developing, and managing real estate properties, such as apartment buildings, office buildings, hotels, warehouses, health care facilities, shopping malls or golf courses. While many REITs invest directly in these properties, some types of REITS can also invest in real estate related loans, such as mortgages. A hybrid type of REIT can invest in a combination of real properties and mortgages. Structurally, a REIT is set up as a company, shares of which may be purchased by investors. REITs allow shareholders to invest in a professionally-managed portfolio of real estate properties.
REITs qualify as pass-through entities, companies who are able distribute the majority of income cash flows to investors without taxation at the corporate level (providing that certain conditions are met). As pass-through entities, whose main function is to pass profits on to investors, a REIT's business activities are generally restricted to generation of property rental income. REITS are a relatively liquid investment since its shares are primarily traded on major exchanges, making it easier to buy and sell REIT assets/shares than to buy and sell properties in private markets. REITs also receive special tax considerations, and typically offer investors high yields. An additional benefit to investing in REITs is that many have dividend reinvestment plans (DRIPs) available.
We are prohibited from giving legal advice, as this service provides information of a general legal nature. I suggest you consult a local attorney who can review all the facts, documents, and tax implications involved. We can assist you with searching to locate forms or we can draft and add forms you may need to our database. However, we cannot advise you to use one particular form over another. We can show you what is available. Please see the forms at the links below to see if they meet your needs or let us know if you would like us to draft a form to meet your needs. You may order forms online or by phone by calling Toll Free: 1-(877) 389-0141 - 8:30-5:00 Central Time Zone Monday – Friday.