Supreme Court Justice Antonin Scalia recently said, “…there are too many lawyers in the United States…” He went on to say, “I do not mean to criticize lawyers, just the need for so many lawyers. Lawyers do not dig ditches or build buildings. When a society requires such a large number of its best minds to conduct the unproductive enterprise of the law, something is wrong with the legal system.”
What does this have to do with real estate and using Land Trusts to hold title to investment real estate… a lot. I think that lawyers serve a valuable service to our society. In fact, I use a lawyer in every one of my real estate transactions (to protect my interest with an insured closing). But, Justice Scalia has a point.
Some say that there are more lawyers in law school right now than current practicing attorneys. And that the United States has 95% of the lawyers in the world! The Illinois Bar Journal says that over the next ten years the USA will graduate 60% more lawyers than there will be legal jobs available to them. How are all these multitude of lawyers going to make a living?
I predict that lawyers are going to find new and creative ways of suing people like us (real estate investors). Legal theory has progressed exponentially in the last few years. Who would ever think that a business owner would be sued because a burglar sustained injury while breaking into the owner's business? Or that a manufacturer would be sued because he failed to warn a consumer not to drink battery acid? Or that a real estate owner would be responsible for dog bite on his property (the dog was not the property owner's or his tenant's dog and the person bit was not the property owner's tenant).
With the legal system reeling out of control it would behoove you to find a way to avoid being a target. The best way to avoid lawsuits is to have no assets (or at least appear to have no assets). Keep a low profile and don't own ANYTHING in your own personal name (especially not real estate)!
Lawyers did not get through law school by being stupid. Any good lawyer (when deciding whether to take on a new case) will investigate the assets of the proposed defendant. Why? Because the lawyer knows that winning in court is different than collecting on a judgment rendered by the court. A smart lawyer will only take on cases that he/she feels confident that he/she can win AND COLLECT ON! Therefore, one of the first steps a lawyer takes prior to filing a lawsuit is to check the public records to see if the potential defendant has any “hard assets” (i.e. real estate).
So, your first line of defense is privacy. And if you are a real estate investor the least expensive form of privacy is the use of a Land Trust to hold title to your investments. Please learn all you can about Land Trusts and how to use them. You will be glad you did!
Land Trusts have been used by American citizens for over 100 years for good reasons. There are many legitimate reasons to use a Land Trust for privacy and asset protection. No one will protect your assets like YOU will. Learn all you can now because “old and cold” matters. Ever since 9/11 it gets harder every year to be private and protect your assets. Do it now! Don't delay!
Here is a link to one of my articles on using Land Trusts in your real estate investing business: 50 Reasons To Use A Land Trust