Land Trust Benefits

What Are The Benefits of a Land Trust?

There are many benefits derived from the use of a land trust.

  1. Privacy of Ownership.

Under a land trust, the identity of the real owner is never disclosed to the public. This feature can be important for many reasons. For example, a number of persons may be purchasing several parcels of real estate for some special purpose, and it may be that the desired result can be best accomplished if the objective is not made public; co-owners may desire that the interest of each member must be kept confidential; or an individual owner may not want to be burdened with inquiries.
Whatever the reason may be for not disclosing the identity of the real owner, a land trust provides the answer. Of course, certain governmental agencies and others, following valid and authorized legal processes, can ask about the beneficial ownership.

  1. Protection for the Owner.

A land trust offers particular benefits in those cases where the real estate is held by two or more persons. If the property is owned by two or more persons, the title to the property might become faulty and unmerchantable because of death, legal disability, divorce, judgements, and many other types of litigation affecting one of the co-owners. When the property is held in a land trust, a judgment against one of the beneficiaries does not constitute a lien upon the real estate held in trust; neither do the ordinary legal proceedings against any of the beneficiaries muddle the title.

Although the real estate itself is not encumbered by a judgment lien, the interest of the beneficiary in a land trust can be subject to the claims of creditors. If the title to the real estate is in the name of a trustee, the creditors must take additional steps to assert claims against the property.

  1. Succession and Ownership.

It has been a common practice to create joint tenancy in real estate holdings solely for the purpose of providing a succession of ownership upon death without the expense and delay of probate proceedings. Under joint ownership, however, either of the joint tenants is given an immediate interest in the ownership and management of that property, and in many cases, it handicaps the real owner as he or she cannot deal with the property without the written consent of the joint owner and the other spouse.

Under a land trust agreement, the party creating the trust can retain sole control over the property during his or her lifetime, with the desired succession in ownership becoming effective upon death without, under certain conditions, the expense of going through probate proceedings. This can be especially helpful to those who live out of state but own real estate in this state. They will not need to institute separate probate proceedings here but can have the land trust property administered in their home states.

  1. Ease of Conveyance.

A land trust affords a convenient means of mortgaging and selling a trust property without having to obtain deeds from all the beneficiaries and their spouses. It dispenses with the necessity of obtaining the release and waiver of homestead from the spouses of the parties interested in the trust real estate. These are noteworthy features if many individuals are interested in the property and are scattered throughout the United States.

Also since the beneficial interest is considered to have the legal characteristics of personal property, it can be pledged for a loan according to the same standards as stocks, bonds, automobiles, or other personal property without the restrictions and formalities of mortgages, title reports, and policies. Such assignments, although substantially easier than conveyances of realty, can produce a gift and transfer tax consequences.

  1. Disposing of Part Interest.

A land trust simplifies the practical problem of disposing of a part interest in a property since the beneficial interest under a land trust can be transferred by assignment; no deed is needed. This avoids a deed’s formal requirements concerning acknowledgment, recording, and joinder by the grantor’s spouse, although it may trigger a transfer tax. This aspect of the adaptability of a land trust becomes important when real estate is held by a number of persons, such as a group of heirs, or if the owners have disproportionate shares of the property.


Source: IDFPR

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