Real estate is a popular asset for self-directed IRA investors. Whether someone has one rental property or a whole portfolio of real estate investments, there is a common goal among self-directed investors to create future wealth, and often that goal is to create a legacy for future generations.
Increase Privacy and Possibly Mitigate Legal Trouble for your Self-Directed IRA Investments
A couple of items investors might not be aware of but could be critical for securing profitable accounts for future generations include: privacy and avoidance of legal issues.
Unlike investments in most stocks and mutual funds, an investment in property has publicly available information including title with a name and retirement account of the owner. If an investor is primarily focused in real estate, it’s possible for their entire portfolio to be in public records.
For investors who wish to keep their retirement account holdings private, investments in real estate may potentially be problematic. Unfortunately, someone with publicly known assets can often become a target of financial predators or even criminals.
Trusts may provide privacy for retirement account investments
For investors who are concerned about privacy and wary of being targeted for frivolous lawsuits or frightened of losing assets in judgement, a land or personal property trust might be a solution.
These types of trusts allow you to place a property, whether it’s owned personally or with a retirement account, and the trust can be named to keep private the owner and the assets.
There are other entity structures that real estate investors often use, including LLCs and Limited Partnerships, but those structures often require annual dues, regular paperwork, annual tax filings that could be onerous and even expensive for investors. Trusts can be set for 20-year terms, without updates, and often can be less expensive.
Here are some potential benefits of trusts:
- Have privacy of ownership
- Limit exposure to judgments and liens, and possibly avoid probate
- Avoid marital interest in title (if desired)
- Prevent partition of the land
- Facilitate estate planning
In addition to real estate, a personal property trust can be used for items not related to investments, including vehicles, mobile homes, etc.
Written by guest author Louis ‘Lou’ Brown, Founder of Certified Affordable Housing Provider.
Lou Brown has been buying, selling and holding property for over 40 years and has been teaching others his methods since 1986. He is the founder of Certified Affordable Housing Provider® and author of “Doing Good While Doing Well” which is more than the title of his book, it is the philosophy that he lives by.
His company mission is:“To Transform Lives through Affordable Housing to Empower Families and Individuals to Enjoy the American Dream of Home Ownership™” Lou has served the industry in such volunteer positions as founding President of National Real Estate Investors Association and now President Emeritus of GA REIA.
Lou Brown is not an employee of Equity Trust Company. Opinions or ideas expressed are not necessarily those of Equity Trust Company nor do they reflect their views or endorsement. These materials are for informational purposes only. Equity Trust Company, and their affiliates, representatives and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal.