By The Wyoming LLC Attorney TeamMay 28, 2022
A Land Trust is a revocable living trust used for property ownership, offering privacy advantages by keeping the owner's identity confidential. It simplifies property transfer, aids estate planning, and can protect assets from lawsuits, though not absolute. Consulting an attorney for personalized asset protection is recommended.
A Land Trust is a revocable living trust used to hold and control property. Land Trusts are recognized by statute in AL, FL, GA, IL, IN, ND, and VA. In other states, the validity of Land Trusts is supported by both common and general trust principles.
Land Trusts are easy to set up and maintain and are an excellent way for real estate investors and homeowners to enjoy anonymity and privacy. What's more, a Land Trust enables the property it holds to avoid probate.
Land Trusts differ from most other living trusts in that the grantor and the beneficiary of the trust are usually the same person. This is referred to as a self-directed trust.
Land Trusts, on the other hand, are similar to other living trusts in that they don't inherently provide asset protection. Land trusts are fantastic for anonymity and privacy, but must be used in conjunction with another entity for asset protection.
When a Land Trust owns the property, the property is deeded in the name of the Trustee and the Land Trust only. And, the names of the Trustee and the trust are the only names revealed to the public.
There is no public record containing the name of the person who created the trust (the grantor) or the person who benefits from the trust assets (the beneficiary). This is where a Land Trust, as a mechanism for personal privacy, really excels!
On the other hand, entities such as corporations, LLCs (and some partnerships) MUST be registered with the state or Federal government. This registration process typically discloses the identity of the property owner and exposes them to public scrutiny and lawsuits.
The only way to find out who is the beneficiary owner of a Land Trust is to file a lawsuit against the Trust, which can be expensive, time-consuming, and may ultimately reveal that the wrong person is being sued. In this way, a holding property in a Land Trust can deter any would-be litigant from pursuing a claim against that property.
Real estate investors are regarded by the public as “wealthy” and are, therefore, more attractive targets for frivolous lawsuits. Lawsuits can be very expensive in terms of the money, time, and aggravation it takes to defend them.
Moreover, having to defend a lawsuit will distract you from doing what you are supposed to be doing, which is profiting as much as you can from your real estate investments. This is where using Land Trusts to hold your property can be extremely advantageous.
If you own large tracts of real estate for commercial or residential development, you may benefit from holding this property in a Land Trust. Also, if you own a piece of land that you want to preserve for wildlife or conservation, holding it in a Land Trust is often recommended.
Smart real estate investors devote a good amount of time and effort toward implementing effective asset protection strategies. Arguably, the simplest form of asset protection is personal privacy. And, the least expensive form of personal privacy for a real estate investor is that which is gained when they use a Land Trust to hold title to their property.
HHowever, to determine whether a Land Trust or some other form of asset protection is best for your situation, you should consult with a knowledgeable attorney who can help you implement an estate planning and asset protection strategy that is tailored to your particular needs.