Land trusts are also known as real estate land trusts. They are a method of transferring the title of a property into the hands of an appointed trustee. Land trusts allow the original property to maintain their claim of ownership on the property. The main difference that occurs with a land trust, is that the trustee will become the titleholder for legal purposes.
Setting up a land trust can be beneficial for many reasons, and there are many types of land trusts. Not only can it be an effective tool for maintaining privacy, but it can also help to avoid probate. Overall, a land trust is simple to create and requires no maintenance.
It is good to note that revocable land trusts are completely different from irrevocable asset protection trusts. Land trusts do not provide asset protection directly but do allow you to avoid being pursued by keeping your assets private.
How Does a Land Trust Work in Delaware?
When you enter into a land trust, it is a private agreement. The agreement occurs only between two parties, yourself and the trustee. The trustee will sign an agreement in order to hold the title for your benefit. This trustee will have no function other than acting exactly as instructed in the deed of trust. Unlike other trusts, land trusts are revocable.
How Does a Delaware Land Trust Protect You?
There are two primary ways in which a land trust will protect you. First off, a land trust allows you to privately own property. It keeps your assets private from family, friends, creditors, and the general public. You are the only person who needs to be aware of what you own.
Additionally, a land trust can protect you from creditors who attempt to pursue you. When you hold property in your name it is at risk to be seized as a liability due to business debts. The beneficiary of a land trust can be an LLC, meaning that you can move your property into an LLC to enjoy liability protection.
Advantages & Disadvantages of Land Trusts in Delaware
Although there are many land trust benefits, it is not the route for everyone. One of the largest benefits to a land trust is the afforded privacy. Keeping your assets out of the public eye and away from creditors is essential.
In Delaware, a land trust also gives you the opportunity to legally pay fewer taxes by avoiding the due on sale clause. This can save huge amounts of money in tax liability. The liability protection that is awarded a land trust (if the named beneficiary is an LLC) is essential. This allows you to separate your personal assets from that of your business, providing you a sense of security.
The only downside to a land trust is there are start-up costs. Typically these begin at a few hundred dollars and can increase depending on how many assets are involved.
Different Types of Land Trusts
Title Holding Trust
This form of a land trust allows a property owner to anonymously maintains all rights over their property. Although the trustee holds equitable title to the property, meanwhile, the property owner will continue to direct the actions of the land trust.
Conservation Land Trust
Although a conservation land trust requires that the property owner give up some rights over land use, they still maintain ownership. This form of trust can also allow the development of the land by the trustee.
Why Put Land in a Trust?
Placing your land into a trust provides a huge number of asset protection benefits. Land trusts allow you to keep your assets private, and avoid the due on sale clause. Overall, you can prevent the acceleration of a Delaware mortgage, while obtaining the protection of an LLC for limited liability protection.
For anyone interested in protecting assets, avoiding high tax liability, and ensuring privacy from creditors, a land protection trust can be the answer. Contact us today to learn more about forming a land trust in Delaware.