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 of 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 of 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.
Have a business to worry about?
Probate is a court-supervised process for transferring assets after you pass away. Probate is usually necessary in Wyoming to transfer assets held by a decedent in his or her sole name at death worth more than $200,000. The process has several drawbacks primarily relating to delays, expenses and privacy. There exist several alternative techniques such as revocable trusts. Learn more about the probate process here.
A Power of Attorney is a legal document which allows someone to act for you. They quit being effective, though, when someone becomes incapacitated. In such cases a Durable Power of Attorney is needed. The Financial planning raises the concern of ensuring effective management of property and financial affairs after you become incapable of managing them. Durable Powers of Attorney provide a flexible and low-cost option for such situations. Lifetime financial planning tackles ensuring effective management of property and financial affairs after you become unable to do so.
Important events affecting a person's finances shouldn't be stopped because the person is unconscious or lacks the mental or physical capability of acting on his or her own. See inside for further information on Durable and Medical Power of Attorney forms.
Revocable Trusts are a popular tool and function as the foundation for most estate plans. ( Follow here for how Revocable and Irrevocable Trusts differ).
The term "living will" became a household word in 2005 due to events surrounding the acrimonious dispute in Florida over Terri Schiavo. Modern medicine makes such extraordinary situations possible and some may wish to place limits on medical care if they feel the burdens outweigh possible benefits. During such situations establishing a person's wishes is frequently impossible when that person loses the capacity to express themselves.
Despite all this, a majority of Americans have failed to provide their family members such guidance. This lack of guidance means family will have an unnecessarily difficult time predicting their loved ones' medical wishes. Completing an Advanced Directive ahead of time helps minimize undue stress during already trying times. Being healthy is no excuse not to begin this important process.
Medicaid planning stems from the understanding end-of-life and long-term health care can be prohibitively expensive for even middle class families. Medicaid is a joint federal-state program which provides means based assistance for those who qualify. Standards differ by state, but generally factor in the income and assets available to pay for medical expenses. There exist strategies for legally making assets inaccessible through the estate planning process. This is generally done via an irrevocable medicaid trust which is a type of Wyoming asset protection trust.
Do you have minor children? If so, then considering planning ahead. Find our guide to choosing and approaching a suitable guardian.
Estate Planning & LLCs
Your LLC is a valuable component of an overall estate plan. State and federal gift and estate tax exemptions are changing, and to keep your plan current an annual estate plan review is advisable. Learn more on our page about Wyoming LLCs.
Your LLC contemplates gifts of LLC units to other family members or to trusts that have been established for their benefit. If you did not sign an annual retainer agreement, make sure you contact your attorney and/or CPA to assist you in accomplishing and properly documenting annual gifts.
Periodically an appraisal of the assets in your LLC and valuation of the LLC itself is necessary. For gifts to be properly documented, appraisals of assets and valuations of LLC interests must be done at the time gifts are made. Updating must also be done in the event of the death of a member.
Don't Procrastinate On Estate Planing
Elder law is vitally important and we take this responsibility seriously. We have seen the damage caused by ignoring the many nuances and pitfalls which make elder law unique. We cannot sufficiently stress the importance of choosing a competent adviser to protect your interests. Following this vain, we are proud members of the Wyoming Elder Law Counsel. This distinction sets us apart from other elder law attorneys. Elderly law often requires advance planning due to legal waiting periods before tax strategies can be fully implemented. It is best to deal with the topic sooner, rather than later, so everything is in place when you, a family member, or other loved one passes away. Passing away without a will can lead to unnecessary anguish and taxes during an already difficult time. You should always consult an attorney when creating your estate plan.