Trusts and Business Organizations Flashcards
What is Trust?
A device created that gives the trustee ownership to hold and manage the property assets for the benefit of the third party, the beneficiary
Who is the Trustor?
The person who created the Trust
Who is the Trustee?
The person who holds the legal title to property and is entrusted to carry out the trust instructions.
Who the is the Beneficiary?
The person/third party who benefits from the Trust
Who is the Fiduciary?
AKA Trustee
Why are spouses using Living Trust in replacement of Probate?
Because it saves time and money from creating a probate.
Community Property does not have right of survivorship. How are couples counteracting this?
Spouses create a Living Trust to transfer real and personal property and then make themselves the Joint Trustees, still giving themselves control of the trust assets. Joint Trustee also gives them right to survivorship. And at the death of the surviving trustee, the assets are passed to the beneficiary or beneficiaries
Trustee, Trustor, and beneficiary can all either be people or legal entities. T/F?
True. The entity can be a Trust Company
Can Trustors name themselves as Trustees?
Yes. By doing this, the spouses can maintain control of their own trust assets, but always under the instructions of the Trust. And in the end, the beneficiary will inherit the assets.
How long does a Trust last?
For the lifetime of the Beneficiary, until the beneficiary reaches a certain age, or when the conditions have been met.
Trusts are only for the benefit of the family. T/F?
False. Trust can be for the benefit of an individuals finance or their family.
What is a Land Trust?
An entity that assumes control over property and other real estate assets at the behest of the property owner
What are Land Trust usually created for?
Property Development and Land Conservation
Once a beneficiary of a Land Trust is specified, it cannot be changed due to legal measures. T/F?
False. Creator of Trust only need to reassign or re-due application for new beneficiary(ies).
The public may search for who is the beneficiary(ies) for a Land Trust of a Nature Conservation. T/F?
False. Beneficiaries of Land Trust are kept unannounced from public records and are only in the name of the Trust, which is normally in the form of letters and numbers.
How do Land Trust provide anonymity?
Assets in Land Trust are owned by the Trust and named after the Trust.
How do Land Trust help prevent the Probate process?
Trust are commonly used to avoid the time and cost it takes to do a Probate. Beneficiaries may be named in Trust, and the Grantor may name themselves as the Trustee(s) enabling the owner to remain control and receive any income from assets. Upon death or end of Trust, the assets and property will be passed to beneficiary.
How do Land Trusts protect beneficiaries from Judgments?
Public records show ownership to Trust, which protects beneficiary from suits and judgments. Suits may be deterred if the legal opponent cannot find any assets to satisfy a judgment. If there are more than one beneficiary and a lawsuit is filed against one, then the judgment will not affect the property itself nor the other beneficiaries, but only the beneficiary affected by the judgement.
Not only will the owner of the Trust not be listed in public records, but any buy and sell real estate sale prices will be kept off records. T/F?
True.
What are the 5 benefits of a Land Trust?
- Privacy of assets from public records
- Separate property assets from other assets
- Protection from judgments
- Avoid Probate process
- Buy and Sell real estate sales prices off public records
What is a Business Organization?
A legal entity that exists independently from its members. Ownership by a Business Organization allows multiple investors to hold interest in the same parcel of real estate
How are Investors organized to finance real estate in a Business Organization?
In various way. Some organizations own the real estate or investors may have direct ownership of real estate.
What is a Partnership?
An association of 2 or more persons. Co-Owners.
What is General Partnership?
All persons share responsibly of management and operation of business, as well as, any liabilities.
What is a Limited Partnership?
Business of 2 or more general partners, as well as limited partners. Business is run by general partners, with limited partners not legally allowed to participate. Limited partners are only liable for losses to the amount that they invested.
What Type of Partnership is suitable for small investors?
Limited Partnership. This type of partnership allows small investors to invest in large projects with minimum risks
1) All owners are fully liable for business losses and obligations.
2) Dissolved and must be reorganized if one owner dies.
3) This can hold title to real estate in severalty.
4) Combines the most attractive features of limited partnerships and corporations
5) The death of an owner may not affect title if provided in the agreement.
6) The death of one owner never affects title to the property.
7) This is a popular method of organizing investors with small investments and limited personal risk.
- Corporation
- Limited liability company
- Limited partnership
- General partnership
- Corporation - 6,7
- Limited liability company - 3
- Limited partnership - 1,5
- General partnership - 2,4
The death of a shareholder in a corporation results in the dissolution of the corporation. T/F?
False.
A general partnership is dissolved and must be reorganized if one partner dies, withdraws, or goes bankrupt. T/F?
True.
