Carolyn Swafford, CTFA, Vice President/Trust Officer
Land trusts are a versatile legal tool for holding title to real estate. Individuals, investors, businesses and families all use land trusts to accomplish specific goals regarding the acquisition, ownership and transfer of property.
Land of Lincoln…and Trusts
Illinois is among only a handful of states that allows the creation of land trusts. Although the legal precedent originated in England, land trusts also began popping up in the United States. They first appeared in Illinois in the late 19th century and were used by real estate developers to acquire multiple parcels of land needed to build large-scale developments.
Using Land Trusts
Privacy is a popular reason to establish a land trust. Property can be deeded into a land trust either at the time of purchase or anytime afterwards. The trust becomes the owner of the property. The individual then becomes the beneficiary with all the rights, avails and proceeds to the property. Since the trust is the owner of the property, the beneficiary is able to keep their name off all public records.
As a legal tool, therefore, a land trust can be used to accomplish very specific goals. Here are three of the most common uses.
Protecting Business Interests
Land trusts are a great way to add a layer of protection between the beneficiary and the property that is contained in the trust. This protection ensures judgment claims against a beneficiary do not automatically become a lien on the real estate or otherwise cloud the title.
If an individual or individuals are named to inherit the beneficiary’s interest after their death, the land trust is not subject to the probate process. This allows the remainder beneficiaries to manage or sell the real estate much faster.
When there are multiple beneficiaries in a land trust, there may be a time when one beneficiary buys another out. Individuals may also want to gift their share to another person. Transferring interests within a land trust is accomplished easily and quickly without the need to record public documents.
Flexible and Easy to Establish
Since a land trust is a legal entity, you will want your attorney to prepare the Land Trust Agreement and Deed in Trust. In cases where Old Second is named as the trustee, the necessary forms are downloadable from our website.
For more information on land trusts, click here or contact me directly at 630-906-5470 to discuss how this legal tool might benefit you.