A land is a type of living trust that is specially designed to hold real estate. Land trusts are revocable (in comparison to irrevocable), which allows for assets placed in the trust to be removed at any time. They can also serve as a useful tool for asset protection and provide the trust owner with anonymity.
Unlike we LLCs, limited partnerships, or corporations, land trusts are not regulated by or require registration with the state. In fact, the trustee does not have to provide any information about those holding interests in the trust to any regulatory or oversight body. This makes land trusts a great privacy option for holding title to your real estate.
A land trust can be an effective tool for managing not only your privacy, but also to avoid probate. They are simple to set up and don't require any upkeep. Note, however, that there is a common misconception between land trusts, which are revocable, and irrevocable asset protection trusts. Land trusts do not provide direct asset protection but can make it harder for others to pursue you assets through use of privacy and other means.
As mentioned above, a land trust is a type of living trust. it is created during your lifetime and is revocable, which means that changes can be made whenever you like. This includes any alterations, removals, or complete termination of the truest if you choose to do so.
The land trust is created by a trust agreement between awner and trustee, in which the trustee agrees to manage the trust property. Once this agreement has been signed, the property is transferred to the trust by deed and recorded at the land records office or county clerk's office. The only decument that needs to be reported with a land trust is the deed. Not even the trust agreement needs to be recorded.
Additionally, you will need to specify a beneficiary of your land trust. The beneficiary can be yourself individually or you can have the option of listing an entity such as limited partnership, LLC, or corporation. You can even list another trust as you beneficiary, which can offer additional privacy and protection.
There are a number of reasons why individuals choose to hold real estate in a land trust. Here are a few of the common benefits that land trust owners can achieve.
One of the most appreciated benefits that a land trust offers os the ability to anonymously hold real estate assets. In our current digital age, it is easier than ever for anyone to conduct a search and find information over the internet. This includes information that pertains to real estate holdings. Through use of a land trust, however, no one outside of you and your trustee knows the owners of the trust. So, if you are looking for an option that keeps your name and information private from the property you own, you can achieve this through a land trust.
One of the most important benefits of the land trust is the protection it offers from liens against your property. When you real estate assets are placed in a trust, they are not subject to liens against the trust's beneficiary
While not an impenetrable protection, land trusts do offer some shielding from lawsuits and creditors, The land trust is a useful tool for asset protection, as it makes you assets more difficult and expensive for creditors to get their hands on. Additionally, when trustee have a different name then your own or live outside of the state (or court jurisdiction) in which you reside, the protection only grows in strength against potential lawsuits.
There is no requirement that your land trust have an Employer Identification Number (EIN). Additionally, there is no requirement that your land trust file tax returns. It is the trust beneficiary, whether an individual or entity, that is considered the taxpayer. Note that when your property is transferred from your name to that of the land trust, this does not impact your tax reporting, even if you are the beneficiary of the trust.
Land trusts allow individuals, as well as entities, the ability to recieve beneficial interest from assets held in the trust. Additionally, if you ever need to change the beneficiaries of your trust, all that is required is completing an Assignment of Beneficial Interest form.