LLC as Beneficiary of Trust - YouTube

Hi Lee Phillips again

I want to talk about something that a lot of people are saying oh you got to do this

and that is you have to set up the LLC

and then make the LLC the beneficiary of your trust

and they're usually referring to this in the concept, or the context rather

of a land trust

now a land trust is just a revocable trust

it's like a baby living revocable trust that you use for estate planning

except it doesn't have all of the estate planning provisions in it usually

it's a trust created to hold real estate

there are a half dozen eight states that actually have land trust laws

unless you're in one of those states

Illinois was the first one

unless you're in one of those states

then your land trust is looked at as a baby living revocable trust

so they say okay

make your land trust

and then have the LLC be the beneficiary of the land trust

and that gives you asset protection

and I've got to have somebody explain that to me

because I've talked to a lot of lawyers

I've scratched my little noodle and thought about it

and none of us

who I'm going to say are in the know

can figure out what the

LLC acting as beneficiary does for you

in the way of asset protection

a beneficiary usually doesn't have any ownership in a trust

they have the potential of getting the benefit from the trust

and if they're sued

then as long as the trust has what we call a spendthrift provision in it

and people make a big deal out of a spendthrift trust

a spendthrift trust is just a trust that has one paragraph out of the 40 pages

that says the beneficiary doesn't have any rights to their beneficial interest

until they get their greedy little mitts on the money

they don't have an interest in it

they get divorced  it's not part of the divorce proceeding

that spend thrift provision is a critical part of your trust

but if the spendthrift provision is there

then the beneficiary can't get sued and have the trust affected  

they can't give away their beneficial interests

they can't do anything

they are detached from the beneficial interest

that they have in the trust

if they get money, it's their money

somebody can sue them and take it away from it

but until they actually get the money

they have basically no interest in this trust

so the spendthrift provision is important

why do we have an LLC as the beneficiary of the trust

when the beneficiary of the trust

you can't sue the beneficiary and get at the trust

why do that

I don't know

and if somebody wants to tell me

I'm certainly willing to listen to them and I will redo this video

but as far as I can see

there is no benefit to having an LLC be the beneficiary

of the living revocable trust

there's no asset protection benefit

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Lee Phillips talking about legal stuff