The “Personal Property Trust” agreement is basically the same as a land trust in that the trustee is essentially a nominee title–holder acting at your direction. Like the land trust, the paper trust is a revocable, living trust. The same rules for tax reporting apply — there is no gift tax or income tax consequence of placing title to your paper in the paper trust.You still retain full control of your trustee, so no fiduciary tax return is required.
Like the land trust, the primary purpose of using the personal property trust is to keep your name off the public records. Let’s examine a few documents that are generally recorded and how we can use them with the personal property trust:
Purchase Option
A purchase option is often recorded in the public records to give notice to the world that you have first crack at the property. Again, using a trust as the named “optionee” will protect your anonymity. Furthermore, it may be an excellent tool for confusing potential creditors; you record options a gainst your property in favor of the name of a trust. To the outside world, your property looks less valuable, because, after all, who would purchase a property subject to the recorded options (nobody but you has to know that your are the beneficiary of the trust and thus the “true” option holder!)
Mortgage or Deed of Trust
One of the most practical uses of a trust is for holding a mortgage or deed of trust. A mortgage is an asset, like any other, that can be found by searching the public records. Using separate trusts for each mortgage will help you keep a low profile. As in the above example, you could record mortgages against your properties in the name of a trust to make your property appear encumber-ed. Make certain that there is at least some consideration for the mortgage or you may be found guilty of filing a fraudulent document.
Auto or Mobile Home
Essentially any asset that is recorded in public records can he held in the name of a nominee–type trust. Department of Motor Vehicle records are often public information and will let everyone know where you live. Holding your car or mobile title in the name of a trust with a post office box or business address will help protect your privacy.
LLC Interest
The names of the members of a limited liability company are public record for everyone to see. Consider forming your LLC using a personal property trust as the member (you being the beneficiary of the trust).
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