Property ownership can be a great thing, but it also comes with a number of stressors and risks, particularly when it comes to liability. Many people look into land trusts to protect both themselves and to protect their property from over development, pollution, and other external risks over long spans of time.
In a nutshell, a land trust is a type of legal entity that takes control or ownership of a piece of property by order of the property owner. The trust acts as a separate legal entity from the owner, which can serve numerous legal purposes.
Regardless of the type of land trust, each trust works in essentially the same way.
To create a trust, the owner of a piece of property signs a "Deed in Trust". This is a legal document that transfers the ownership of the property in question to the new legal entity, the trust itself.
As the document is created, the landowner, who serves as both the beneficiary and the trust grantor, can make rules about how the land is to be used, who is allowed control over the land, how the income that comes from the land is distributed, and more.
For certain trusts (title-holding land trusts, detailed below), the owner is still allowed to effectively control the property but can maintain anonymity while doing so.
For other types of land trusts, the rules are more specific and may even exclude the original landowner from using or developing the property according to certain guidelines. In most cases, these trusts are used when the landowner wants to preserve the property for conservation reasons.
A land trust can protect a property's owner in several ways:
There are many great reasons to utilize land trusts to secure your property to protect yourself from creditors or family members. But there are also reasons why you might decide to go another route.
There are two types of land trusts that may be created by property owners.
A title-holding land trust enables the original owner of the property to keep their rights over the property in question, as well as control any of the actions of the land trust, anonymously. These trusts were originally called Illinois land trusts, as they were first utilized successfully in Chicago in the 19th century.
Even today, some states don't have legal structures that allow for title-holding land trusts. In the majority of cases, however, states will defer to the Illinois land trust model if a person requests it. This allows individuals to create these trusts in all 50 states even if there aren't state-specific guidelines for their property.
The other type of land trust is a conservation land trust. This type of trust involves the property owner surrendering some rights over the development or use of their land. As the name suggests, these trusts are normally created to protect the land itself, the wildlife on it, or to preserve historical and cultural sites.
In some cases, people may start conservation land trusts to protect natural resources from being developed or from being exposed to pollutants.
Some landowners opt instead for conservation "easements". These effectively donate the property's development rights to the trust, and the trust manager or overseer is entrusted with the task of managing the property and making sure that the rules in the easement are enforced.
Lastly, conservation easements are maintained even when the land is passed to heirs, sold, or otherwise comes into new ownership. This allows the conservation measures included to remain in effect in perpetuity.
All in all, most people put their land in trusts to either protect the land itself or to protect themselves from the myriad risks or liabilities that come with owning valuable property. Consider the different types of land trusts carefully before drawing one up for yourself, and be sure to hire an excellent land trust lawyer to look over your documents to make sure everything is airtight.