A land trust is simply a trust that is established solely for the purpose of holding property. By putting property in trust, it facilitates: privacy, transfer among several owners, asset protection and in some cases, tax advantages. You’ll need an attorney to help you set one up in a way that meets your needs.

Land trusts have become especially popular for holding rental properties where there is concern about being sued by tenants. Using an entity such as an LLC or corporation can also provide asset protection, but usually mandatory state registration will reveal the identity of the true owners. Generally with a trust, this information remains private. And in an era where the Internet and computerized land records make your identity known in a few clicks, many people like the privacy aspect of a land trust.

Setting Up a Land Trust

As with any trust, you’ll need a document or trust agreement which provides the terms of the trust. In addition to providing the rules of the road for managing trust property, a trust agreement designates the trustee, beneficiary and the property to be managed. With a land trust, real estate is the trust property, and the ultimate owners of the property are the beneficiaries. The trustee is often an attorney, bank or another legal entity (e.g., a corporation or LLC formed by you, where you own the majority interest) that acts in accordance with the terms of the trust.

There are a number of issues that must be addressed and handled properly for a land trust to work for you. These include:

• Asset protection
• Privacy
• Tax issues
• Transfer of interest among multiple owners

This is merely a thumbnail sketch of land trust basics. You need to check with your legal advisor to get the best advisor on putting property in a land trust. State laws affect (1) how property can be transferred and (2) the particulars of placing property in trust.