A land trust can be an effective tool for managing not only your privacy, but avoiding probate. They are simple and have no required upkeep. Unfortunately, many confuse land trusts, which are revocable, with irrevocable asset protection trusts. They do not provide asset protection directly, but can make it harder for people to pursue you by being private and out of state.
How does it work?
A land trust is essentially a private agreement, whereby one party, the trustee, agrees to hold title to property for the benefit of another party or parties, the beneficiary(ies). ... Plus he or she has no function other than to do as the trust deed instructs. Land trusts are most often revocable.
How does a land trust protect you?
First: it allows for privately owning property to avoid needing family, friends and creditors from knowing what you own and trying to pursue you.
Second: Those who own property in their personal name, with all the negative implications that implies, can move property into an LLC to enjoy liability protection and potentially lower taxes.
E.g., if you own 10 properties in your name, and fear being sued, you may transfer property to a land trust, with a beneficiary being the LLC. This allows you to avoid the due on sale clause, while also having the property moved out of your name for liability protections.
Advantages & Disadvantages of Land Trusts
Compare and contrast the pros and cons of land trust
Pros: privacy, avoiding due on sale clause, liability protection if the beneficiary is an LLC
Cons: Cost and expense to start (at minimum a few hundred dollars)
Different Types of Land Trusts
Title Holding Trust
allows the property owner to anonymously maintain all rights over the property and direct the actions of the land trust. These trusts are also commonly called 'Illinois land trusts'
Conservation Land Trust
requires that the property owner give up some rights over land use and development.
Why do you put land in a trust
Land trusts can provide asset protection benefits by providing you with privacy. They also avoid the due on sale clause, or accelerating a mortgage, while allowing a beneficiary to be an LLC for limited liability protection.
