Land Trusts
Advantages to Holding Title in a Land Trust
Ownership: Beneficiary retains control of the property while maintaining the privacy of ownership.
Probate Avoidance: A land trust is a low-cost alternative to a living trust.
Judgment to Lien Protection: Liens against the beneficiary do not attach to real estate held in a land trust.
Convenience: Land trusts can make it easier to transfer interests or to use the property as collateral.
How does a land trust work?
The current owners deed the property into the land trust, naming a trustee such as Chicago Trust, and perhaps a beneficiary or succession of beneficiaries, much like they would for an insurance policy or retirement account.
The trust agreement, a long-standing form that is generally the same throughout Illinois and Indiana, will name a holder of the "beneficial interest," usually the owners deeding property but not limited to that. The trust is there to protect the beneficiary from most public records searches other than those allowed by law to governmental agencies.
The owners will also name someone, perhaps themselves or others, as the holder of a "power of direction" allowing them to act on behalf of the trust for financing or other purposes.
The holder of the power of direction can be changed by the beneficiaries, and the beneficiary can also be changed. The land trust is a way of dealing with real estate as a financial asset, creating a flexible process to pass ownership to future generations, or implementing other planning ideas.