Top 4 Things To Know About Using A Land Trust

May 5, 2018

You may have heard of land trusts before. A land trust is simply a legal contract where the owner of a piece of real estate property transfers the title of that property over to someone called a trustee.

Even though the owner of the property still holds all the rights to the property, they will now be anonymous, which can certainly be a real asset.

The original land trust was the Illinois land trust law, and it remains the law in that state today. Five other states also have land trust laws: Hawaii, North Dakota, Virginia, Indiana, and Florida.

Here are the top four things to know about using a land trust:

Land Trusts Are Cheaper Than LLC’s

The main benefit of setting up a land trust over an LLC is that the land trust does not require you to pay any fees at the state or federal level. On the other hand, setting up an LLC will require you to pay a state fee in order to register the company. So if you want to own property but keep your name anonymous, a land trust will be the cheaper route to go.

Choose Your Name Carefully

You’ll get to name your land trust, and you’ll want to be careful that you accomplish two things:

  1. You don’t name your land trust anything that compromises your anonymity (if that’s something you want).
  2. You don’t violate any copyright laws.

Choosing a name for your land trust may seem like the simple and meaningless part, but in reality it’s something you’ll want to think carefully about.

Choose Your Beneficiary Even More Carefully

An even more careful decision you will need to make is who the beneficiary of your land trust will be. Take note that your beneficiary does not have to be an actual person, and can instead be a corporation or an LLC.

Another route you can take is to choose more than just one beneficiary. The only issue with this is you might run into liabilities between the various co-beneficiaries, but it’s still an option to consider.

You Get To Decide Who Holds Power of Direction

The biggest decision you will make when setting up a land trust is deciding who officially holds the Power of Direction. Take note that the trustee of your land trust does not have to be the one who holds the power of direction.

The most common avenue to take is to make the beneficiary hold Power of Direction, or at least in the early stages of the trust agreement.

Using A Land Trust

Knowing how land trusts work can really give you added confidence and comfort when investing in real estate property. If you would like to own property but at the same time what to keep yourself anonymous, a land trust could be the way to go.

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