In this article, we’ll cover exactly what a land trust is, the benefits of land trusts, and how you can use one to your advantage in your estate plan.
What is a Land Trust?
A land trust is a private legal agreement that transfers ownership of a piece of property from the owner to a trustee. A land trust enables the grantor to retain all of the property’s rights, despite the transfer of ownership. This indicates that the grantor may continue to enjoy the property’s benefits. These advantages could be the ability to develop the property, sell it, rent it out, or pass it on to their heirs.
All 50 states in the US have legalized private land trusts. There are now just eight states with legislation governing land trusts. They include Florida, Illinois, Indiana, Montana, Georgia, Hawaii, South Dakota, and Virginia. The state law books in these states contain statutes that officially recognize land trust. Common law land trusts are legal in other states. Instead of being based on written statutes, these laws are based on custom and judicial precedent.
The trustee is often chosen by the trustor (the person or corporation that creates a Land Trust) to hold legal title to the trustor’s property for the benefit of the beneficiary. The owner of the property held in a land trust can be both the trust’s beneficiary and the trustor
Other beneficiaries who hold a beneficial stake in the property may also be named by the trustor. Certain state laws allow for one to hold title to multiple properties.
Land trusts have a number of advantages, including but not limited to the following:
Confidentiality
Confidentiality regarding the trustee’s ownership of real estate is provided by land trusts. The beneficial ownership stake of the trustor will not be disclosed in public documents. The name of the land trust trustee will be displayed in the public records instead.
Privacy of Ownership Transfer
You can use a public deed to transfer ownership of your real estate property in several states. A land trust offers a confidential means of ownership transfer. For the purpose of transferring their beneficial interest to another party, the trustor may create a private land trust. The public won’t be made aware of the transfer.
Avoid Probate
In the case of the property owner’s passing, a properly drafted land trust agreement might specify successor beneficiaries, helping to bypass the time-consuming and expensive probate process. Upon the owner’s passing, the assets in the land trust will automatically transfer to the successor beneficiary listed in the trust. You can also separate personal finances from real estate with a land trust which is another great benefit of land trusts.
Avoid Liens
Any real estate titled in your name, with the exception of your homestead, becomes subject to liens when a creditor secures a judgment against you. You can avoid a lien on the property held in the land trust since a beneficiary’s stake in a trust is regarded as “personal property” rather than real estate.
There are many benefits of land trusts you may encounter as you develop your estate plan. Reach out to Protect Wealth for the best resources on how to protect your assets!
