What are the differences between trusts versus corporations?
Differences between trusts versus corporations:
There are many reasons that people corporations, but one of the primary reasons is for asset protection. The problem with corporations is that you must register your corporation with the Secretary of State and inform them who the president, treasury, secretary, and agent for service of process are for the corporation. If there is any commingling of your personal and corporate assets, or if it considered an alter ego or sham corporation, the corporate protections can be pierced (what is called piercing the corporate veil). This will subject the general partner to the liability of the corporation.
A trust (especially a land trust) can provide some asset protection if done correctly. Many people use land trusts for rental property, but it can be used to hide your personal assets. Essentially, you can use this type of trust to hide who the trustee is of the trust (using a nominee trustee), try and hide your name from the online data base with the county recorder’s office, and use a P.O. box instead of a physical home address for mail. Essentially, you are hiding who the owner of the assets are, making you appear to be destitute. However, be advised if you are already in a lawsuit this tactic cannot protect you. For more information about the differences between corporations and trusts, or for a free legal consultation please call us! 714-642-3838
