Widespread knowledge that is finally circling in the real estate investing circles, especially at the many local Real Estate Investor’s Meetings (REIA), proliferating in most of the ‘Get Rich Quick’ guru seminars, and also trickling into the self-help books, is my quote from over a quarter century ago: “Never own real estate in your own name.” I’ve seen my quote paraphrased, re-written, or slightly changed, but however it was presented, it all means the same – Own your real estate and everything else of real value, in fictitiously named entities, also known as legal fictions, rather than your own persona. These legal fictions are known as Corporations, Limited Liability Companies, Trusts, and a plethora of other variations of these.
Another way to view this is that the Universe, God if you will, has given us power over our own little worlds, our own lives. Most of mankind does not act spiritually, but their humanity, their ego, moves them to a thought of dominance over people, places, & things. Man has to “own” things in his own name so that he can egotistically brag that he is powerful as the long list of things owned appears to be that proof to other humans. This causes quarrels, strife, and many humanistic transgressions related to and caused by the ego.
An example is the common story of the Native American Indians before invaders from other continents seized the land in North America. The indigenous people would use the land without boundaries. They would stand on a plateau and enjoy the view of the entire land, the sunrises, the sunsets and all in-between were an everyone’s land available to all. It was every creature’s land. It was truly God’s country.
Then comes the invaders from other lands. These raiders made up laws to control the land and sliced and diced it into smaller and smaller parcels. They introduced human ownership where there was none. They took the beauty of it all and made it theirs. The game of human control in North America was on.
Looking back at history, one thing that does not change and proves itself correct over and over again is this quote by George Santayana: “Those who cannot remember the past are condemned to repeat it.” The reason I mention the quote here is that something curious happened when this slicing and dicing was taking place. Two classes of people became land owners. There were the ‘common’ people who staked out and claimed land in their own names; and there were the capitalists who either claimed land in a fictitious name of corporations, or in most cases Trusts. As a point of clarification here: many laws did not allow large tracts to be claimed by non-persons, so these entrepreneur’s Trust Corporations would buy up land from the real people monopolizing vast tracts into their Trust Companies. Many were known as “The Robber Barrons.”
The 21st century timeframe in which we now live has developed into a plethora of legal reasons for not own anything in anyone’s personal name.
- The wealthy know this and don’t own anything, but they control the legal fictions that do own stuff – including the land.
- The middle class think they know what they want but usually do it all wrong, mainly because their intelligent ego directs them into entities that they can feel important about.
- The poor don’t even have a chance to keep anything because everything is in their egocentric personal names.
Many people get this idea, especially when some sort of negative occurrence enters their life. They are faced with a lawsuit, bogus or not, that will expose all they “own” placing it at risk of loss.
Another example of a negative occurrence is when mom or dad are nearing death and they wish to transfer their property to their children. Unfortunately, the lawmakers and tax authorities understand that most people don’t think very far ahead and have placed heavy ‘death taxes’ on these individuals. These death taxes don’t only apply at death, but have a ‘look back’ period which invokes the death taxes back a certain time period before death. Currently most individual state governments follow the lead of the federal government look back period which is currently five years. Periodically, there are those legislators who propose to change that to ten years! What this means is that people need forward thinking in planning to leave anything of value – especially real estate, to their heirs.
The bottom line is: Get your personal ego out of the way and start accumulating properties in other names that you control. Then keep your ego tucked away by not telling anyone what you control. Bragging has been the death of many – legally and literally!
As mentioned, the wealthy are already taken care of as they don’t own anything…
…and the poor are doomed to remain as they are because if they own anything it is in their own name.
The middle class is to whom I wrote this message. They think they know everything because they are ‘educated’ and are perceived to be smarter than most others. It is this thinking is what clouds their minds as their ego actually runs their lives. The majority of the “Get Rich” seminars, courses, books, and instruction all indoctrinate this middle-class ego into setting up and using a Limited Liability Company (LLC). When I ask someone how they hold title when they buy properties, they smugly reply: “An LLC formed in so-and-so state.” Unfortunately they have no idea what they are doing as evidenced by the answer to my next question: Why did you form your LLC in that state? The reply is almost unanimously: “Because the “________” course I took offered it through their lawyer from that state.” They can’t be faulted for doing what they were led to believe was best, but they close their mind to even hearing about the wonderful world of Realty Trusts. That, to me, shows ignorance.
I’ve learned not to argue the point because once a mind is made up it will defend its decision without regard to facts. If you are one that succumbed to forming an LLC this way, I will show you how you may still be able to use that business entity. However, more than likely, you will never use it to hold property title as you may have intended, or you may realize that the LLC is useless.
The best time to take action on setting up your Realty Trust to hold title to real estate is before initially acquiring the property. I recommend the legal fiction that is used for holding real estate title be a Realty Trust as described in my book: ‘The Millionaire Mindset of Asset Protection and Realty Trusts.’ Read this book, take the course, and understand your choices.
It’s your financial life. It’s your legacy to leave to assets to your heirs. Take the time to learn how and do it right! Set it up now before you get sued or die. It’s time to begin to enjoy the life you were meant to live.
- Enjoy, Succeed, and I’ll See You Over the Top,
– Alan David Kosinski, Life Extraordinaire