Title Holding Trust Training
The reason is that things happen to people (lawsuits, tax liens, judgments, divorces, death, etc.) that can instantly cloud the title to whatever property they hold in their names, making it impossible to sell or refinance until their title is cleared of such impediments. The problem is ever more severe when multiple parties, especially non-related investors, are joined together on the title of real property.
Nowadays though, many of them are switching to the use of the non-taxed title holding trust since California is now imposing (as of January 1, 1994) a minimum, yearly franchise tax of $800.00 on any and all entities required to be registered with the Secretary of State, regardless of whether or not they're currently doing business in California. [California Revenue & Taxation Code, Section 23081(b)]
So even the newly adopted and novel "limited liability company" is being assessed the franchise tax board's $800.00 minimum yearly tax.
Keeping the title to your property clear of any clouds is so important, that even the use of a taxable corporation to hold it is preferable to keeping it in your name. Unlike us mortals, a legal entity won't suddenly disappear, die, or become incompetent overnight. And note that control of a corporate entity takes the form of privately transferable personal property (i.e. shares of stock, partnership units, beneficial interests, etc.) whereas the transfer of title to real property is publicly recorded, for all the world to see and investigate.
"Teflon Coat" The Titles To Your Properties
Title companies regularly accept the title holding trust format because it was originated by one of the largest title companies of all time, Chicago Title & Trust Company, and because it's a time-tested device that's been used to hold title to property (especially large investment properties) since 1891.
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Learn How To Do It
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