How the Trust Works - Gary Mialocq & Associates - Vocational Rehabilitation Specialists

How it Works -- A Very Simple Process

IN THE BEGINNING

1. A (title-holding) land trust is created in the name of the current owner (the settlor) who holds a 100% beneficiary interest. No one else is involved, only the owner and his/her trustee. Title is vested in the Trustee. We always use a non-profit corporation with many years experience as Trustee.

2. Escrow is opened to facilitate the assignment, in the existing land trust, of beneficiary interest to co-Beneficiary.

3. A Beneficiary Agreement is created between beneficiaries wherein the property's Mutually Agreed Value (MAV) is established in order to determine settlor beneficiary's beginning Beneficiary Contribution (equity and/or any non-recurring closing costs, etc.). This documentation also reflects all co-beneficiary contributions (equity contribution and/or non-recurring costs).

4. A Possession and Occupancy Agreement (triple net lease) is executed between the trust and the 2nd co-beneficiary (responsibility for collections and disbursement are then assigned to PAC Management).

AT THE END

1. The property is either sold by the trustee at FMV, or purchased and refinanced by co-beneficiary at FMV

2. All loans are retired (out of the proceeds of the sale or refi).

3. Costs of disposition are paid (e.g., escrow, re commissions, etc.).

4. The settlor beneficiary then is refunded its beneficiary contribution (beginning equity and non-recurring startup costs).

5. The co-beneficiaries are refunded their beneficiary contributions (non-recurring startup costs, equity contributions, escrow fees, any part of commissions paid at inception, etc.)

6. ALL remaining (net) proceeds are distributed among beneficiaries in proportion to their respective percentage of interest held

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