[Michigan_LT] FW: Never hold title in your name

Thu Mar 15 14:00:26 PDT 2007

Hello Everyone,

This issue has affected the land trust community in other states as
well.  For your reference, the Michigan Secretary of State will not
authorize the creation of a business corporation, nonprofit corporation,
or LLC with a name that implies it is a trust company, unless it is
clear from other words in the name that the business conducted does not
include the business of a trust company.  Go to
http://www.cis.state.mi.us/bcsc/forms/corp/pub/restrict.pdf for a
complete, updated list of restricted words.

This is the language pertaining to "Trust":

"TRUST - RESTRICTED. A corporation subject to the Business Corporation 

Act or the Nonprofit Corporation Act (other than bank holding company),
or a

foreign or domestic limited liability company subject to the Limited

Liability Company Act shall not assume a name which implies that it is 

a banking
 corporation; an insurance or surety company; or a trust company

unless from the other words in the name, it is clear the business 

conducted does not include the business of a trust company. See MCL
450.1213,

450.2213, and 450.4201. See also Michigan Banking Code of 1999, MCL

487.11101 - 487.15105. The word is acceptable in the name of a 

corporation formed to operate as a real estate investment trust, a
corporation that

complies with provisions of the Internal Revenue Code to obtain special 

tax treatment."

Other states also treat the term land trusts as title holding
instruments (such as Illinois), whereby a real estate trust is set up
with a bank (trustee), which owns legal and equitable title to the
property.  A beneficiary actually has the right to manage and control
the land or property.  This vehicle can be used, for instance, to avoid
probate by passing land through a land trust.  

For the Illinois statute (and the definition of "land trust" in that
state), go to: (765 ILCS 405/Land Trust Beneficial Interest Disclosure
Act.
<http://ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2185&ChapAct=765%26nbs
p%3BILCS%26nbsp%3B405%2F&ChapterID=62&ChapterName=PROPERTY&ActName=Land+
Trust+Beneficial+Interest+Disclosure+Act%2E> 

This has raised some controversy in Illinois recently, with the Dennis
Hastert real estate scandal, in which he earned huge profits in a real
estate deal, and did so through the land trust vehicle, which
essentially hides ownership in Illinois.  See:
http://www.sunlightfoundation.com/node/793
<http://www.sunlightfoundation.com/node/793> 

When this news broke, a number of land trusts (conservancies) fielded
calls from outraged supporters/citizens who thought that the land trust
referred to in the Hastert deal was in fact a conservancy.   The air has
cleared on this issue for the most part in Illinois, but it prompted a
coalition of Illinois land trusts, named at the time the Illinois
Association of Land Trusts, to change its name to the Prairie State
Conservation Coalition, so as to avoid confusion in the future.

Best regards,

Erin

Erin M. Heskett

Midwest Director

Land Trust Alliance

6849 S. Sprinkle Road

Portage, MI  49002

Tel.  (269) 324-1683

Fax. (269) 324-7009

________________________________

From: michigan_list-bounces at lists.ltanet.org
[mailto:michigan_list-bounces at lists.ltanet.org] On Behalf Of
BLonik13 at aol.com
Sent: Wednesday, March 14, 2007 2:03 PM
To: Lorna408 at aol.com; Suzie at washtenawlandtrust.org; wkellum at rvlt.org;
michigan_list at lists.ltanet.org; bod at rvlt.org
Cc: Mark at washtenawlandtrust.org
Subject: Re: [Michigan_LT] FW: Never hold title in your name

In a message dated 3/14/07 12:27:39 PM Eastern Standard Time,
Lorna408 at aol.com writes:

Washtenaw is called land trust

A bit of history:  what is now called Washtenaw Land Trust started in
the early 1970s as the Washtenaw Land Conservacy, which did a few
notable projects but was mostly inactive by the 1990s.  Another group,
the Potawatomi Community Land Trust, incorporated in 1989 and became the
active group in Washtenaw County.  The two organizations merged in the
late 1990s, first becoming the Washtenaw-Potawatomi Land Trust and
finally WLT.  When the final name changes were being pursued, there was
a desire by the state to have "conservancy" used instead of "trust" for
the reasons Lorna cited.  An influential board member was able to
convince the state that the word trust should be continued and
prevailed.  My understanding is that any new organization that forms is
supposed to use conservancy.

Hope that helps!

Barry Lonik

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