Entity Structuring ◊ Title Holding Trust (THT) ◊ Limited Liability Company ◊ Limited Partnership ◊ General Partnership By Ward Hanigan Sponsored by: The Norris Group Saturday, October 28, 2006

2 Ward Hanigan Real estate investor since 1972 Full-time foreclosure investor since 1982 Full-time Title Holding Trust user since on-1 foreclosure/trust trainer since 1985

3 Active foreclosure discussion board, with over 19,000 archived messages Extensive collection of foreclosure tips, tricks and techniques Historical foreclosure statistics from code sections pertaining to foreclosures Large assortment of fillable forms 70+ years of home loan interest rates

4 Questions? Okay by me, as long as we stay on topic…

5 Entity Outline Entity structuring is vital for the accumulation, protection and preservation of one’s hard- earned wealth. Today, our focus is on the protection and preservation of your assets. Entity Structuring

6 ASSET PROTECTION From Outside Threats (establish a low, low profile) Anonymity of Ownership Don’t put your name anywhere on any public, real property ownership records (no deeds or trust deeds, etc). Multiple Entities Hold your properties in separate hidey-holes—don’t cluster them all under one roof. Non-Disclosure of Transfer Tax on any Deed Regardless of whether you’re buying or selling. Entity Structuring

7 ASSET PROTECTION From Inside Threats (be they friend or foe) Equity Shields Friendly Trust Deed (recorded) Purchase Option (recorded) The Charging Order (threat of paying tax on phantom income) Limited Liability Entities Limited Liability Company Limited Partnership or FLP Entity Structuring

8 ASSET PRESERVATION Entity Structuring Avoidance of pre-payment of state income tax Avoidance of probate costs and delays Avoidance of guardianship difficulties and costs Privacy of ownership shift, upon sale or death

9 Essential Entities Entity Structuring I.Title Holding Trust (THT) – Holds title to real property. II.Limited Liability Company (LLC) – Acts as trustee of a THT. III.Limited Partnership (LP) – Owns beneficial interest of a THT. IV.General Partnership (GP) – Sidesteps California’s scheme for collecting advance payment of state income tax when an individual sells investment property.

10 Holds Title to Real Property A simple, legal method of holding title to real property, so that the recorded title to property is held by an appointed trustee. This type of trust was created in Illinois in 1891 by Chicago Title and is known there as the Illinois Land Trust. Everywhere else, it’s commonly called the Title Holding Trust (THT). Title Holding Trust

11 THT Benefits Simplicity of formation No cost replication Speed of creation Unparalleled privacy No annual fees or taxes paid Title Holding Trust

12 Trust Principals of any Trust Trustor – party who funds/creates the trust Trustee – party who administers the trust Beneficiary – party who owns the trust Title Holding Trust

13 Trustor The trustor creates the trust and then transfers the title of real property into the trust via a transfer deed. The trustor is also known as the settlor, grantor, donor, or maker of the trust. Title Holding Trust

14 Trustee The trustee, upon written direction from the beneficiary or owner of the trust, executes documents that affect the legal title to the trust’s property. The trustee is not given, nor exercises, any possessory rights or powers over the trust’s assets at all. Title Holding Trust

15 Beneficiary The real power holder in the THT. The non-public owner of the trust, who has retained all possessory powers and privileges regarding the real property that’s held in the name of the trust. Through the power of direction, the beneficiary controls the acts of the trustee as they affect the title of the Trust’s property. Title Holding Trust

16 Putting It All Together Trust Entity – Holds the title to real property. ◊ Limited Liability Company – Acts as the trustee of the trust. ◊ Limited Partnership – Holds the trust’s beneficial interest. General Partnership – Sidesteps California’s advance payment of state income tax. Title Holding Trust

Contact Information We appreciate your attendance today. Ward Hanigan InnoVest Resource Management 4569-A Mission Gorge Place San Diego CA OFFICE (619) FAX (619)