Blog

Land Trust, do you have one?

Trustee certificationMany have heard the term land trusts, but most are unfamiliar with what they entail and their benefits. A land trust is a legally binding agreement in which a piece of property is held by a company or person for another person. The parties included in the trust are the beneficiary, grantor, and the trustee.   Although similar to a revocable living trust; in this case land is the only asset being protected.  The beneficiary is the person(s) who is the recipient of the property(s) named in the trust and directs the trustee to act in the best interest of the trust. If there are multiple beneficiaries and there is a lack of mutual agreement, the trustee(s) will act in the interest of the majority. The trustee(s)’ primary function is to do what the beneficiary directs them to do. The trustee has no personal liability and cannot lose the property.  The grantor is simply the person (s) who establishes the trust. 

The trust agreement is not public record. Therefore, it is much easier to avoid the general public finding out who owns the property.  The trust offers asset protection in particular because the it is protected from the due-on-sale clause by the Garn St. Germain Act. Another form of potential asset protection the land trust provides is the inability for a creditor to put a lien on the property held in the trust.

In addition to providing the benefits of privacy and asset protection, land trusts have other advantages as well. The trusts’ beneficiary can be changed without changing the information in the public records. It also avoids probate even without a will in place. The succession of ownership is designated within the trust. A land trust can also be structured to allow for multiple ownership of a piece of real estate.  It is also important to note even with a land trust in place, the tax advantages are the same for homeowner’s and real estate exemptions.

Land trusts continue to gain in popularity and are accepted in most states. However, before entering into a land trust, be sure and check the rules within the state in which the property is held.

 

Posted in: Land Trusts

Leave a Comment (0) ↓

Leave a Comment

*