A Land Trust is a way to hold Real Estate in such a manner where the owners of the Real Estate can remain private to the Public. This is the case because the only individuals listed in the Public Records is the Trustee of the Land Trust and the name of the Trust (which typically does not have the Owner referenced). Any Real Estate transferred, or Deeded into the Land Trust is called the “Trust Property”. A Land Trust is very similar to a Revocable Trust in that a Land Trust may still claim homestead for any Real Estate which is declared to be the Primary Residence of one of the Beneficial Owners of the Land Trust. On the other hand, the major difference between a Land Trust and a Revocable Trust is that a Land Trust primarily owns Real Estate and a Revocable Trust can and usually does hold a multitude of assets.
Similar to the Revocable Trust, a Land Trust is a Private Agreement between an owner of certain assets (Real Estate in this case), a Trustee and one or more Beneficiaries (which is/are typically the original owner(s) of the Real Estate). Due to the fact that the original owner of the Real Estate is also the beneficial owner of the Property, certain benefits to owning Real Estate can be retained by said Owner even with a Land Trust.A “Beneficial Interest”, pursuant to the Land Trust Act, means any interest, vested or contingent and regardless of how small or minimal such interest may be, in a Land Trust which is held by a beneficiary. Any such beneficiary can enjoy the following benefits including, but are not limited to: the ability to claim or continue to claim a Homestead Exemption on the Real Estate titled in the name of the Land Trust; the ability to claim all Property Tax reductions; Portability of the Homestead Exemption; and Property appreciation/depreciation tax benefits in some circumstances.
The Trustee (or Trustees) of a Land Trust has certain duties to the Beneficiaries of the Trust (typically the Original Owner). In general, such duties include, but are not limited to: the duty to convey, sell, lease, mortgage, and/or deal with the Trust Property or to exercise such other responsibilities and duties as are outlined in the Land Trust Agreement and the Land Trust Act. The Trustee also has the duty to sell and dispose of the Real Estate upon the termination and/or expiration of the Land Trust Agreement. All administrative functions are also the responsibility of the Trustee and the Trustee must keep accurate and complete accounting which regard to the Real Estate held in the Land Trust. The Trustee is generally and in good faith authorized to execute any documents required to undertake the above responsibilities. One (1) or more Successor Trustees may also be named in the Land Trust Agreement. Another interesting feature of the Land Trust is that there could be multiple Beneficiaries who can each hold a Beneficial Interest in the Real Estate as Tenants in Common. In the next blog we will cover the advantages and disadvantage of Land Trusts.
Contact The Presser Law Firm, P.A. for a complimentary consultation to learn more about Land Trusts, Asset Protection, Business Law, or Estate Planning.
The Presser Law Firm, P.A.
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