Why a Land Trust? This blog post discusses the benefits of a Land Trust. A Land Trust is a way in the State of Illinois to hold real estate. Simply put, a Land Trust is a strategy to maximize one’s privacy, provide basic estate planning, and provide liability protection or otherwise known as “asset protection”. Here is a link to explain the benefits of a Land Trust in Illinois: https://www.ctlandtrust.com/FAQ.htm.
There are 3 major benefits of a Land Trust. The first benefit of a land trust is privacy. Nowadays, a simple google search will identify the owner of real estate, which is a major problem. A simple internet search can identify the name of the sellers and the name of the buyers. This is especially problematic for people that value privacy or have a profession where their identity and the public knowing one’s address can cause security risks. For example, a police officer may not want people to know where they live. There is a legitimate security risks. Furthermore, a person may not want their colleagues to know the purchase price of their house or their exact address. The bigger problem now is scammers that aim to take advantage of people.
ESTATE PLANNING AND LAND TRUST
The second benefit of a Land Trust is Estate Planning. Often, people do not have an estate plan and one of the major problems of real estate is a lack of a contract to designate a beneficiary of one’s real estate interests. Similar to a Life Insurance Policy, a Land Trust enables a person or family to designate a beneficiary of real estate. Please note that a Land Trust does not provide comprehensive estate planning and gifting a home through a Land Trust is at best an incomplete estate planning. However, an incomplete estate planning is better than no estate plan. Similar to a Living Trust, a Land Trust may be changed or amended.
With a Land Trust, there is the “legal title owner” and the “beneficial owners”. The legal title owner means that a Trustee manages the Land Trust as the “legal title owner”. Unlike traditional real estate, a Land Trust is owned generally by a Land Trust Company with a Designated Land Trust Number. Illinois is one of the few states that have a Land Trust. The legal title holder will appear as the Land Trust Company and the Land Trust will have a designated number. Thus, the legal title owner will not appear as “Sue and Bob Smith” as an example. Similar to tenants by entirety, a husband and wife (or two spouses) can hold their real estate interests as tenants by entirety. Generally, a Tenancy By Entirety Affidavit is required to be filled out by the Land Trust Company.
Beneficial Interest Holder of a Land Trust
A Land Trust has the second type of property interest, which is called “beneficial ownership”. The beneficial ownership or owners are the true owners of the real estate. The beneficial interest holders are generally kept secret and private. Typically, Walmart and many public companies will purchase real estate in Illinois under a Land Trust. The purpose behind this is to keep the ownership of the property from public records. Thus, the only identity that will be known is that a Land Trust purchased the property interests. When I lived in the City of Chicago, I heard rumors that Alderman often purchased property in a Land Trust’s name to shield their identity. An Alderman’s interests in investment real estate could be a major campaign issue and thus, public officials did not want other people to know their property interests. These are a couple of examples of the benefits of a Land Trust. Similar to real estate, the beneficial owners have the power to refinance their property and sell their real estate interests. The beneficial owners can tell the legal title holders where to transfer their property interests. The beneficial owners are the owners and have the power to inform the Land Trust Company what they want done.
Asset Protection and Liability Protection Benefits of a Land Trust
The biggest benefit of a Land Trust is the liability protection provided by the Land Trust. Real estate investors often are taught at their real estate investor seminars about the benefits of a Land Trust. A Land Trust prevents liens and judgments from attaching to real estate. Generally, when a person receives a judgment in their personal name, a judgment attaches to all real estate property that is owned by that property. One of the benefits of the Land Trust is a Land Trust prevents liens (mechanic’s liens) and judgments from attaching to real estate. For example, one of my clients received a judgment against them when they had real estate in the City of Chicago. My clients were able to sale their real estate holding because the lien and judgment did not attach to the property. One of the key benefits of a Land Trust is Asset Protection. The key to Asset Protection is placing one’s property into a Land Trust prior to any possible litigation occurring. One cannot prevent a lien from attaching to real estate if one knows of a liability interests and places real estate into a Land Trust.
In conclusion, Sean Robertson is an estate planning and real estate attorney with offices in Naperville, Yorkville, and Shorewood, Illinois. Gateville Law Firm is a real estate law firm concentrating in real estate, estate planning, and asset protection law. Attorney Robertson is a graduate of DePaul University College of Law and University of Illinois at Urbana-Champaign. Attorney Robertson has over 15 years of legal experience and assists families in the suburbs of Chicago in areas such as Naperville, Plainfield, Yorkville, Kendall County, Oswego, Plano, Bristol, Wheaton, Lisle, DuPage County, Aurora, Montgomery, Joliet, Shorewood, and Will County with their real estate legal needs.