What is a Land Trust?

A land trust is a revocable, living trust primarily used for privacy purposes in estate planning and asset protection. It is used to take title to real estate to provide anonymity for the owner. It can also be used with a trust assignment wherein the seller deeds the property to the trust, making himself the beneficiary. The beneficial interest (ownership) of the trust is then assigned to a third party, such as an investor/buyer. This is known as a “land trust assignment”.

Individuals use land trusts mainly for privacy and to avoid probate. No one knows what one’s bank balance or stock investments are, yet anyone with an internet connection can look up a person’s real estate holdings. A person who has an auto accident or a doctor who accidentally injures a patient is a much better target for a lawsuit if he or she owns real estate investments. So some investors buy their properties in land trusts so their name does not appear in the public records. The land trust also allows the property to immediately pass to their heirs at the moment of death, rather than go through a long probate process.

I am sure you wouldn’t walk around with a financial statement taped to your forehead would you? So why would you have your most valuable assets exposed to public scrutiny? Anyone can go down to the county courthouse or recorder’s office and look up the owner of any property. Real estate records are now computerized, so all of your real estate holdings can be located at the touch of a button! Lawyers, creditors, IRS agents, newspaper reporters, tenants and other “snoops” can find out what you own and whether you are worth going after. Don’t give them the ammunition – make your real estate ownership hard to find by using a land trust.

Some of the other advantages of land trusts for individuals are:

• Sales price of the property can be kept off the public records
  
• Property taxes are lower if the purchase price is kept private
  
• Judgments or liens (such as IRS liens) against an individual’s name are not a lien against their land trust property
  
• Partners can more easily continue a project if one dies or is divorced
  
• Interests can be transferred quickly without recording a deed
  
• Managing a rental property is easier when the trustee can be blamed
  
• Negotiating a purchase or sale can be easier when the trustee can be blamed
  
• Liability on financing can be limited to the assets of the trust
  

I have created and used land trusts on all my properties. You can use an attorney to draft a land trust agreement and create a land trust for you, but most attorneys are not knowledgeable in land trusts. Even if you do find one who is, it is likely that he would charge a lot of money to create one for you. I personally use a Legal Documents at Lawyer Free Prices written by renowned Colorado Attorney William “Bill” Bronchick. This kit is all one would need to understand and create land trusts and land trust agreements for any form of property. All legal forms and documentation is included along with every states specific information resources.