Land Trust

Land trust is gaining popularity recently as a way to hold a property title. Land trusts are great devices for privacy and for transferring ownership but land trusts do not offer asset protection. Below are information to help you understand how land trust works.

What is land trust?

A land trust is an agreement where one party (the trustee) agrees to hold ownership of a real estate property for the benefit of another party (the beneficiary).

Why does land trust offer privacy?

The privacy comes about because the real estate title is recorded in the name of the trustee of the land trust and not in the names of the beneficiaries or the true owners of the trust.

Deterring litigation

If a real estate investor is the beneficiary of a land trust, no one will be able to find him or her through a search of public records. The search of public records does not turn up any ready assets to proceed against may deter litigation.

Land trust offers on liability protection

A land trust does not protect a real estate investor from liability. If a tenant is injured on property in which a real estate investor is the personal beneficiary of the land trust, that real estate investor will be personally responsible.

If sued in a lawsuit must reveal land trust interest

If the real estate investor is sued due to something unrelated to the real estate property, his or her beneficial ownership in a land trust may be reached. And if he or she is asked in court if he or she has any interests in real estate, he or she must disclose that he or she owns a beneficial interest in a land trust. This is where family limited partnership comes in handy.