Creating a living trust to buy a house?

User Forum Topic
Submitted by edna_mode on September 23, 2010 - 8:50pm

Hi all, I was wondering if anyone here has ever created a living trust specifically for buying a house. The reason for this is that we want to keep our privacy and not have anyone look up our names on the tax rolls.

What consequences would this have? Would I lose any "first time" buyer advantages? Capital gains advantage when selling? Something else I'm not seeing? What questions should I be asking?

Thanks muchly.

Submitted by SD Realtor on September 24, 2010 - 6:03am.

Wrong way... Buy the home first and then move it into your living trust. You will never be able to buy it in the name of the trust because you will not be able to finance it. We have our home and rental in our trust but every time we refi them we have to move them in and out.

Submitted by Coronita on September 24, 2010 - 6:20am.

SDR,

I think the reason why the OP wanted to do it the other way (though I'm not sure how you could possibly) is he/she doesn't want to appear in public records as the owner... He/she wants to remain anonymous...

Submitted by bearishgurl on September 24, 2010 - 9:27am.

edna_mode, almost everyone who has a living trust has it in their own name, i.e. "Gonzalez Family Trust." They create the trust and then move all their assets into it, real property and otherwise. I have not seen a personal trust created that is not in the name of the trustee(s) but maybe this has been done.

I DO know of a couple of people I was doing asset searches on who took title to or transferred property they owned to fictitious names or an "LLC" they created solely to buy property under, obviously in attempt to avoid having a our clients' judgement liens attach to it. However, this ownership is easily proven by a prevailing party in suit to a court to be a fraudulent transfer.

Sure, you can take title to real property under an entity you have created with the Secretary of State. But if this form of taking title is solely for the purpose of avoiding a judgment lien, then there is a high probability of it being found out and attached anyway, plus incurring court costs for yourself and the party you lost against in suit.

Pursuant to portions of CA Government Code section 6250 et. seq. (codified from Federal law), aka the "CA Public Records Act," only certain individuals are entitled to have their property and property tax records blocked from public view as a matter of law by county recorders and assessors. In pertinent part, it states:

6254.21. (a) No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.

(f) For purposes of this section, "elected or appointed official" includes, but is not limited to, all of the following:
(1) State constitutional officers.
(2) Members of the Legislature.
(3) Judges and court commissioners.
(4) District attorneys.
(5) Public defenders.
(6) Members of a city council.
(7) Members of a board of supervisors.
(8) Appointees of the Governor.
(9) Appointees of the Legislature.
(10) Mayors.
(11) City attorneys.
(12) Police chiefs and sheriffs.
(13) A public safety official, as defined in Section 6254.24.
(14) State administrative law judges.
(15) Federal judges and federal defenders.
(16) Members of the United States Congress and appointees of the President.

See pdf brochure (wait for loading):

http://www.thefirstamendment.org/publicr...

Practically speaking, if you walked into a CA county assessor or recorder's office and asked to see records NOT shown on their computer system, absent a court order or search warrant, you would be denied.

I am not an attorney and this post does not constitute legal advice.

Submitted by Coronita on September 24, 2010 - 10:40am.

bearishgurl wrote:
edna_mode, almost everyone who has a living trust has it in their own name, i.e. "Gonzalez Family Trust." They create the trust and then move all their assets into it, real property and otherwise. I have not seen a personal trust created that is not in the name of the trustee(s) but maybe this has been done.

I DO know of a couple of people I was doing asset searches on who took title to or transferred property they owned to fictitious names or an "LLC" they created solely to buy property under, obviously in attempt to avoid having a our clients' judgement liens attach to it. However, this ownership is easily proven by a prevailing party in suit to a court to be a fraudulent transfer.

Sure, you can take title to real property under an entity you have created with the Secretary of State. But if this form of taking title is solely for the purpose of avoiding a judgment lien, then there is a high probability of it being found out and attached anyway, plus incurring court costs for yourself and the party you lost against in suit.

Pursuant to portions of CA Government Code section 6250 et. seq. (codified from Federal law), aka the "CA Public Records Act," only certain individuals are entitled to have their property and property tax records blocked from public view as a matter of law by county recorders and assessors. In pertinent part, it states:

6254.21. (a) No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.

(f) For purposes of this section, "elected or appointed official" includes, but is not limited to, all of the following:
(1) State constitutional officers.
(2) Members of the Legislature.
(3) Judges and court commissioners.
(4) District attorneys.
(5) Public defenders.
(6) Members of a city council.
(7) Members of a board of supervisors.
(8) Appointees of the Governor.
(9) Appointees of the Legislature.
(10) Mayors.
(11) City attorneys.
(12) Police chiefs and sheriffs.
(13) A public safety official, as defined in Section 6254.24.
(14) State administrative law judges.
(15) Federal judges and federal defenders.
(16) Members of the United States Congress and appointees of the President.

See pdf brochure (wait for loading):

http://www.thefirstamendment.org/publicr...

Practically speaking, if you walked into a CA county assessor or recorder's office and asked to see records NOT shown on their computer system, absent a court order or search warrant, you would be denied.

I am not an attorney and this post does not constitute legal advice.

I believe you can name the living trust whatever you like. However, when I converted things into a living trust, grant deed was also filled out with who the trustee(s) were (not sure why).... So I have seen ABCXXX Living Trust, Dated (specific date)... The issue at hand though is that to remain truely anonymous, it would have to be done from the start. Strictly for the sake of remaining anonymous, I don't think it works if you start with the property and transfer into a living trust. Because you (the person) is already recorded, and the transfer is recorded.. So someone really wanting to find out will put things together from the history of the grant deeds.

I have not figured out a way to remain anonymous, without hiding behind an LLC. Not sure how to do that, and it probably has to be done at the time at sales. (Anyone can comment on that?) Also, how does this work out with a loan? I can see it work out if it's a personal loan from a relative or such, but not sure how banks loans would allow for this... (Don't know).

But since it's really too late anyway for me, I haven't given it much thought thereafter...because like I said, I think it has to be done the first time at sales, otherwise there's a public paper trail anyway. Maybe for the next RE purchase :)

..But to the original poster, yeah, I wouldn't like piggie's here snooping around my records either....You'd probably get a lot of crap like "you paid for what? Wow was there fraud, wow, how was this assessed this way, wow what's the loan balance, wow something fishy going on with the loans..... Those damn (insert your favorite race card here), they're taking over everything!!", not to mention you'd probably get (free of charge)

a) 10+ different versions of a personalized rent versus buy calculation,

b) 10+ versions of why it would make more sense to buy in (insert your favorite area other than CarmelValley such as MM, Santee, Del Sur,RP,xxx) and send kid to private school versus buying in CV......

c) possible guest feature on (insert your favorite housing bubble blogspot)...

d) 40+ estimates of how much your home is is really worth after RE falls another (insert your favorite guessimate) percent....Regardless, you overpaid anyway :)

e) Multiple lectures from experts on what a big risk it was for you to purchase due to the the lack of your job security in your profession, which they found out from searching your linked-in/facebook/(name your other favorite social media) profile.....

:)

(...and you wonder why I'm not a fan of social media.... )

Submitted by SD Realtor on September 24, 2010 - 7:26pm.

flu I understand but what is on the tax record and what the lender requires are orthogonal. The lender will not lend to a trust, period. The lender will lend to a person or persons for residential real estate. Forget corp entities for the moment. So in order to get financing the trust deed will be in their name. No way around it. Once that is recorded then that will be on the tax record. Now, they can create a trust and move it into the trust and record that deed. However the initial financing will be done AND recorded in their name. If they wanna pay cash for the home, then it is a different story.

Submitted by edna_mode on September 26, 2010 - 9:11pm.

This is fantastic information everyone -- I appreciate it!

For clarity, the reason for anonymity has everything to do with not wanting my physical address easily accessible by internet searching, and nothing to do with any judgments or liens.

Unfortunately, it would seem to me that running for public office would be an even more roundabout, or possibly even conflicting, way of achieving that goal. :)

But I could be persuaded otherwise. Vote For Edna!

Submitted by Coronita on September 26, 2010 - 9:16pm.

edna_mode wrote:
This is fantastic information everyone -- I appreciate it!

For clarity, the reason for anonymity has everything to do with not wanting my physical address easily accessible by internet searching, and nothing to do with any judgments or liens.

Unfortunately, it would seem to me that running for public office would be an even more roundabout, or possibly even conflicting, way of achieving that goal. :)

But I could be persuaded otherwise. Vote For Edna!

Too late...Unless you also don't plan on keeping a phone line or specifically request the phone company not to publish your address.

Submitted by Hatfield on September 26, 2010 - 10:14pm.

Let's assume that this was a cash purchase. In some states (Nevada? Colorado?) the officers of a corporation are not a matter of public record. So it seems that you could form such a corporation in one of these states and then have the corporation buy the property.

In fact, assuming that's possible, it seems like you could later sell the property without having the sale recorded or the property re-assessed, simply by selling the corporation.

There has to be a catch. What have I missed?

Submitted by SK in CV on September 26, 2010 - 11:57pm.

Hatfield wrote:
Let's assume that this was a cash purchase. In some states (Nevada? Colorado?) the officers of a corporation are not a matter of public record. So it seems that you could form such a corporation in one of these states and then have the corporation buy the property.

In fact, assuming that's possible, it seems like you could later sell the property without having the sale recorded or the property re-assessed, simply by selling the corporation.

There has to be a catch. What have I missed?

A few problems.

First, a corporation formed in a different state must register with the state of CA before doing business here. I suspect, though I'm not positive, that purchasing real property would qualify as "doing business". A foreign corporation has to file similar documents with the secretary of state as domestic corps, identifying officers and an agent for service of process.

Second, who's going to buy the corporation (an out of state corp at that) and assume potential liablities of that corporation, the tax and legal headaches that would go along with maintaining the corporation and even bigger headaches of liquidating it. And legally, that transfer would have to be reported to the county assessor by the beginning of May following the sale if not sooner.

Submitted by edna_mode on September 27, 2010 - 1:55pm.

@flu: A phone line? As in, a land line? Who has one of those anymore?

If you get a prepaid cell phone with no contract, no address needed. No address published. No problem.

Submitted by Coronita on September 27, 2010 - 4:01pm.

edna_mode wrote:
@flu: A phone line? As in, a land line? Who has one of those anymore?

If you get a prepaid cell phone with no contract, no address needed. No address published. No problem.

Utility bills? Surprisingly, it's searchable too.
Trust me, you're privacy is less than you think. These companies mine data all over the place. Your employer information, etc. It's simply amazing.

Submitted by Shadowfax on September 27, 2010 - 10:45pm.

SK in CV wrote:
First, a corporation formed in a different state must register with the state of CA before doing business here. I suspect, though I'm not positive, that purchasing real property would qualify as "doing business". A foreign corporation has to file similar documents with the secretary of state as domestic corps, identifying officers and an agent for service of process.

Second, who's going to buy the corporation (an out of state corp at that) and assume potential liablities of that corporation, the tax and legal headaches that would go along with maintaining the corporation and even bigger headaches of liquidating it. And legally, that transfer would have to be reported to the county assessor by the beginning of May following the sale if not sooner.

Foreign corporations do have to register, but only if they are conducting business. owning a residence is not "doing business" in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.

Submitted by SK in CV on September 28, 2010 - 12:28pm.

Probably getting a bit off topic here, however...

Shadowfax wrote:

Foreign corporations do have to register, but only if they are conducting business. owning a residence is not "doing business" in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.

I'll take your word for it that owning a house (or a piece of vacant land for that matter) doesn't qualify as "doing business", and if we're assuming that the property is a personal residence, we've got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it's a piece of rental property, same thing, collecting rent would be "doing business".

Another issue is that corporations aren't entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i'm not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there's no lower tax for corporations for capital gains. That's also a problem with selling the whole corporation. The buyers wouldn't be entitled to adjust the basis of the asset upon sale. Doesn't matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can't get around it if the seller is a foreign corporation, like you can if it's the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn't it.

Submitted by Coronita on September 28, 2010 - 1:21pm.

SK in CV wrote:
Probably getting a bit off topic here, however...

Shadowfax wrote:

Foreign corporations do have to register, but only if they are conducting business. owning a residence is not "doing business" in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.

I'll take your word for it that owning a house (or a piece of vacant land for that matter) doesn't qualify as "doing business", and if we're assuming that the property is a personal residence, we've got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it's a piece of rental property, same thing, collecting rent would be "doing business".

Another issue is that corporations aren't entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i'm not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there's no lower tax for corporations for capital gains. That's also a problem with selling the whole corporation. The buyers wouldn't be entitled to adjust the basis of the asset upon sale. Doesn't matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can't get around it if the seller is a foreign corporation, like you can if it's the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn't it.

SK,

What are the "other ways"?

-Curious kitty.

Submitted by SK in CV on September 28, 2010 - 4:41pm.

flu wrote:

SK,

What are the "other ways"?

-Curious kitty.

I said "may". I'm thinking maybe the only foolproof way would be to pay all cash so there's no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn't show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can't think of any reason that wouldn't work.

Submitted by Coronita on September 28, 2010 - 8:37pm.

SK in CV wrote:
flu wrote:

SK,

What are the "other ways"?

-Curious kitty.

I said "may". I'm thinking maybe the only foolproof way would be to pay all cash so there's no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn't show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can't think of any reason that wouldn't work.

Thats fine. I'm just trying to figure out if anyone's done this for real.. I guess those who have, kinda want to hide the trade secrets :)

Submitted by momma mia on October 15, 2010 - 8:37pm.

I live in Northern California and we have a terrible thing happening up here: a website is collecting all the public information on houses and posting it (owner names, addresses, price paid, taxes paid, etc.). Here is the site: http://sf.blockshopper.com/

We have been the victims of identity theft (since 2005 - with ongoing/annual problems). Privacy is critical for us.

We are currently renting in a high priced neighborhood and will be buying a house soon. In the meantime, I have trust documents sitting on our kitchen counter waiting to be signed, but the documents have the trust named after our family name.... and I was beginning to think we should consider renaming the trust to something that has nothing to do with us so that the identity thieves can't find us...

But now that I hear that you can't get a LOAN on a piece of property if it's in a trust without your family name???? Is this really true?

I don't know what we are going to do.... :(

Submitted by bearishgurl on October 16, 2010 - 8:15pm.

momma mia wrote:
. . . I have trust documents sitting on our kitchen counter waiting to be signed, but the documents have the trust named after our family name.... and I was beginning to think we should consider renaming the trust to something that has nothing to do with us so that the identity thieves can't find us...

But now that I hear that you can't get a LOAN on a piece of property if it's in a trust without your family name???? Is this really true?

I don't know what we are going to do.... :(

momma mia, you can't get a loan at all in the name of a trust.

You will take title in your own names and THEN transfer the property to your trust. You can do this all in the same day if you can get the escrow officer to draw up a quitclaim deed to your family trust.

I wouldn't worry about identity thieves possibly viewing your original grant deed and deed of trust at the recorder's office. There are no SS numbers on there and nothing for them to steal in order to assume your identity.

Submitted by Snakeongrasss on December 11, 2014 - 6:07am.

Well I am searching this because someone is trying to kill me
So the only info on me is at the tax office! It's easy to put electric bill in any name
Just use your social security number and when they ask your name tell them different name! I would appreciate if someone that knows how I can get my house out of my name but keeping ownership! I only owe on the land 20,000 but I paid cash for my house to be built. I can't afford to pay off land . I been here 8 years but can't sleep, In fact it is 7:30 am and haven't slept yet and sober FYI . Should I talk to lawyer (liar) or can someone here tell me simply how to get house out my name without paying off land!
Thanks in advance!

Submitted by FlyerInHi on December 11, 2014 - 5:25pm.

snakeongrass, it's simple enough.

You need to do a Declaration of Trust and have it notarized. You will be the trustee of the trust. You can do it yourself or pay a lawyer or a specialized service to it for you. People have said about $600 to $1200 cost.

Then you do a quit claim to transfer to property out of your name to the trust. Again, you can do it yourself or pay a title company or lawyer to do it for you.

For most people who have simple estate planning, they could do it themselves using some of the tools and info available on the Net.

BTW, it doesn't matter if you still owe of the property. You're still responsible to pay the mortgage.

Submitted by CA renter on December 11, 2014 - 9:49pm.

Even if you transfer it to a trust, the individual owner's name will be available to someone who's looking for the individual because the transfer and prior owner's information will be public.

Might want to talk to an attorney or talk to someone in public records. The best way to keep your name out of public records would be to never have the property in your name at all. Not sure that's possible if you have a recorded mortgage of any kind, as most lenders require everything to be in your personal name.

Submitted by FlyerInHi on December 11, 2014 - 10:11pm.

He should use a trust name that is meaningless. Some people use names like the John Doe family trust. If he uses his initials then anyone looking would know that it was a transfer better and individual and his trust.

No way to keep name out of the public records if you get a mortgage in your personal name.
Banks usually don't lend to trusts only to individuals.

If you pay cash you can record in the trust's name only.

I paid cash for a condo and the idiot escrow officer thought it was a good idea to record the trustee's name along with the trust. But there's no requirement to do that. I had to make her correct it but my name went into the public records.

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