Land Trust
Transferring a personally owned investment property to a land trust in order to provide additional legal protection for your holdings is a relatively straight-forward but highly technical process. Our estate planning and small business attorneys often deal with the legal implications characteristic of this type of transaction.
There are a number of benefits to creating a land trust, but one of the most notable benefits is confidentiality. A title holding land trust can allow you to make transfers of the beneficial interest in the property without revealing your personal identity since the land trust document remains in your office or home safe and is not recorded with any government agency. While title to the property is held by the trust (and that is what will be seen when a title search is performed), the named trustees are provided control over the use and possession of the property through the trust document.
In addition, U.S. Code, Title 12, Chapter 13, Section 1701j-3 protects owners of mortgaged property which they wish to transfer to a land trust from a situation in which their mortgage holder may demand payment in full due to transfer of the property to a trust. This law states that a lending institution cannot accelerate payment on a note involving:
a transfer into an inter vivos trust in which the borrower is and remains a beneficiary; and
which does not relate to a transfer of rights of occupancy in the property (Cornell Law)
Other benefits of a land trust include:
- Ease of Transferability – The beneficiary or “beneficial owner” of a land trust may be changed by amending the trust document and without recording a change in the public records.
- Avoid Probate – A Land Trust document permits you to designate succession of ownership exactly as you wish, thereby avoiding probate and costly, time-consuming legal proceedings.
- Tax Advantage – You are still eligible for the homeowner’s and senior citizen’s real estate tax exemptions where applicable.
For asset protection, an LLC may be named as the beneficiary in the trust document. If you are considering a land trust for holding property, contact our experienced business or estate planning attorneys for more information.
