Ultimately, the settlor/trustor is the person who gives instructions to the trustee regarding how to legally handle the property. The trustee is a fiduciary, as they hold the title of the property; however, they will not ever incur any personal liability for any issues related to the trust. Land trusts are revocable, in most cases, and a trustor may be terminated, modified, or changed at any time according to the discretion of the trustor. In some cases, a trustee is removed for being uncooperative or not following the direction of the trustor or beneficiary. Land trusts are a way for beneficiaries of the trust to protect their privacy and protect their assets.
Protection of Privacy
Land trusts are often created to protect the privacy of the beneficiaries by legally placing the title in the name of the trustee. Two separate legal documents are needed in order to create a land trust: a trust agreement and a trustee deed.
A trust agreement is a legally binding contract between the trustor (beneficiary) and the trustee. All rights, responsibilities, duties, powers, and obligations of both parties are clearly articulated in this legal document. The trustee has a legal obligation to only follow the directions of the trustee regarding the property discussed in the trust agreement.
Following the execution of the trust agreement by all parties, the trustee deed must be recorded. Once this trustee deed is recorded, the land titles office will no longer show the original owner (trustor/settlor/beneficiary) as the owner of the property, but rather will show the trustee as the owner of the property. While the trustee deed is public information, the trust agreement is private, and no person will ever be able to discover the identity of the actual trustor or beneficiary.
Land trusts are an excellent tool to allow a beneficiary to protect their privacy and identity. Additionally, this is a way to shield assets from those who are litigious in nature, looking for persons who have a lot of assets or “deep pockets.” If a person’s name is not listed in public records regarding any real estate holdings, it may deter those seeking to file a lawsuit against wealthier people. While a land trust is not specifically an asset protection trust, it can easily be argued that it is a substantial and important tool to avoid a litigator’s search for assets.
Additional Benefits of a Land Trust
There are many other advantages other than privacy that occur when a trustor or beneficiary owns real estate through a land trust. Some of those benefits include the following:
- Easier Transferability – In most cases, the beneficiary of a land trust can be changed at any time without needing to officially record a change in public records.
- Avoids the Probate Process – A land trust allows a beneficiary to designate succession of ownership and completely avoid the probate process regarding the property covered by the land trust.
- Multiple Owners – If more than one person owns the property, a land trust can establish a way to clearly and easily divide the property in the future.
- Taxes – If you have property as a beneficiary in a land trust, you are still eligible to legally receive tax exemptions for both homeowners and senior citizens as they apply to your specific case.
Seek Expert Guidance
If you have a property that you are considering placing in a land trust, you may feel confused and have questions about whether this tool can assist you with your financial goals. Our legal team can help you determine what type of legal options are available to you to protect your privacy as well as protect your assets.
Our experienced attorneys at Anderson Advisors would welcome the opportunity to talk with you regarding how you can protect your identity and assets through a land trust, and help ensure your legal and financial rights are protected. Schedule a complimentary Strategy Session today with a Senior Advisor to get expert guidance. You can schedule online or by calling 888.871.8535.
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