Land Trusts - Basic Information
Who? Almost anyone dealing in real estate transactions can benefit from using a land trust.
What is a land trust? A land trust is a legal instrument that conveys both legal and equitable interest in real property to a trustee. The beneficiary owns a beneficial interest in the land trust, which is considered personal property, and retains control over the land.
Who should my trustee be? You have several options here – you can have a family member, your company, or a close friend. The drawback to using your spouse or company as trustee, however, is that the trustee’s name will appear in the public records. Often times an attorney or your bank will offer trust services.
When do I use a land trust? Ideally, you want to take title at closing in a land trust and the trustee will sign all of the documents, including the deed, mortgage and note (the beneficiary may sign a personal guarantee). Some lenders may not allow this. Land trusts are also useful in short sales and other unconventional deals.
Why? Some reasons for using a land trust...
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Privacy
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Easier to transfer interest
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Helps to prevent liens or judgments from attaching to trust property
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Equity in the trust property can (in certain circumstances) appear on your balance sheet as an asset, not a liability
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Keep assets from going through probate
