- Land Trust vs. Living Trust
Land Trust vs. Living Trust
Trusts, PoA, AHCD, Probate & More
Land Trust vs. Living Trust
A trust is a legal arrangement between you (the grantor) and a trustee, who will hold and manage your assets for the benefit of a third party referred to as the trust beneficiary. A trust is similar to a Will in that once the grantor dies, the remaining assets are distributed by the designated trustee to the trust beneficiary in the manner dictated by the trust agreement.
What is a Living Trust?
A living trust is a trust that is effective during the grantor's lifetime, as opposed to a testamentary trust, which is often included as part of a Will and only becomes effective once the creator dies.
A living trust can be either revocable or irrevocable. A revocable trust, which is virtually synonymous with the term “living trust”, is a trust that can be amended, restated, or revoked by the grantor, as long as he or she is alive and mentally capable. An irrevocable trust is one that, once created, cannot be amended, restated, or revoked.
The grantor of a living trust can also be its trustee and, in certain cases, it's beneficiary as well. Once the grantor of a revocable living trust passes away, the living trust becomes irrevocable and a designated successor trustee steps in to manage the trust assets per the terms of the trust agreement.
Revocable Living Trusts vs. Irrevocable Living Trusts
A revocable trust and an irrevocable trust are similar in they both enable assets held in the trust at the time of the grantor's death to bypass probate. This is in contrast to assets that are held outside a trust, which will usually have to go through probate, unless they are subject to a beneficiary designation.
Furthermore, both a revocable trust and an irrevocable trust allow the grantor to plan for periods of incapacity by designating a successor trustee who can step up and manage the trust assets while the grantor is alive but incapacitated. This is in contrast to a Will, which only dictates what happens to your assets after you die.
However, since a revocable living trust can be amended, the grantor retains control over the trust and can move assets in and out of the trust as he or she pleases. On the other hand, an irrevocable living trust offers the grantor a great deal of asset protection, but in exchange for relinquishing control over the trust. What’s more, while a revocable living trust generally uses the same tax ID number as the grantor, an irrevocable trust uses its own tax ID number.
What is a Land Trust?
Land trusts are living trusts that are designed to hold real estate and assets associated with real estate. In other words, a land trust can hold developed and undeveloped land, mortgages, notes, and other real estate-related assets.
Most land trusts have third parties such as banks as their trustee. Also, most land trusts are set up as “self-settled” trusts, meaning that you (the grantor) are also the beneficiary.
With a land trust, the trustee must manage the trust real estate, according to the wishes of the trust beneficiary, who is the true owner of the land trust and dictates how it should be managed. This is in contrast to most other types of trusts, where the trustee manages the trust according to the terms of the trust agreement and the beneficiary has very little or no control at all over the trust assets or how they are managed.
Finally, most land trusts are revocable living trusts, and like any other revocable living trust, they are created during your lifetime and can be amended, restated, or revoked at any time.
Land Trust Benefits
As it is with any other trust, property held in the trust at the time of your death will bypass probate and pass directly to the trust beneficiaries in a manner dictated by you. Furthermore, because the grantor of a land trust is often its beneficial owner as well, you (the grantor/beneficiary) can buy and sell the trust real estate as if it were titled in your own name, even though it is actually titled in the name of the trust.
But, perhaps the biggest benefit of creating a land trust to hold your real estate is anonymity. Once you transfer property into a land trust, it will be titled in the name of the trust on all public records. Then, because you are not named on any public records, the public can't see that you actually own the property.
This anonymity can prevent others from suing you because they found out that you own a considerable amount of real estate. What’s more, if someone does sue you, the difficulty and expense of identifying what real estate you actually own can prompt them to settle with you for pennies on the dollar.
Consult With an Experienced Wyoming Estate Planning Attorney
Wyoming is one of the few states where self-settled trusts are allowed. However, to ensure that your trust has the desired effect and that you enjoy all the benefits a land trust can offer in Wyoming, you should work with an experienced Wyoming estate planning attorney who has in-depth knowledge of Wyoming's trust laws and understands the importance of anonymity for asset protection.
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