How Does Land Trust Work?

Private individuals own about 60 percent of land in the United States. In most cases, these private landowners encounter land-use planning, regulatory barriers, and security of tenure.

Interestingly, a study by the U.S. Department of Housing and Urban Development further stated that the average regulatory barrier cost for one dwelling unit is $11,910. One of the best ways to minimize challenges over land acquisition is through a land trust.

In general, a land trust refers to a private agreement wherein the trustee agrees to manage the trust and hold the title to the property on behalf of the owner. While the trustee holds the title for legal purposes, note that the property owners still have complete control of their assets in this scenario.

The trustee, meanwhile, is limited to the conditions found in the trust agreement. In other words, the duties and responsibilities of the trustee are conditional based on the permission of the beneficiaries. They will also be continually assessed by the beneficiaries.

Essentially, the function of a land trust is to protect the asset owner from tax exposure and legal proceedings. Bear in mind though that trust can either be revocable or irrevocable depending on the agreement of both parties.

  • Revocable Trust: A trust agreement wherein provisions can either be adjusted or canceled depending on the grantor at the request of the beneficiaries.
  • Irrevocable Trust: A permanent trust agreement that allows the creator or grantor of the trust to cut off their ownership rights.

Why Should I Consider Land Trust?

The National Land Trust Census revealed that more than 700 land trusts were recorded in 2015 in 48 states including the U.S. Virgin Islands, Puerto Rico, and the District of Columbia. Here’s why you should consider the land trust services of Royal Legal Solutions.

Ensure Smooth Estate Planning

In general, a land trust can decide what happens to the real estate following the death of the grantor. More often than not, individuals opting for a land trust will completely prevent the possibility of a probate from other potential heirs who are not listed as beneficiaries.

Moreover, the beneficiary will also avoid ancillary probate and charges for any property purchased in another state. In short, a land trust can also work together effectively with your existing real estate portfolio and ensure smooth management.

Best of all, ownership changes are private and protected against any liens and judgments that may be held against beneficiaries.

Prevent Land Partition

Generally, a partition is a legal procedure wherein two or more property owners are forced to sell their shares to liquidate interests. Doing so puts all the owners at risk of losing control of their property and assets.

A property controlled by a land trust, however, is not dependent on partition proceedings. This eliminates placing all the other beneficiaries at risk. After all, a land trust is not legally owned by the managing heirs, but is rather managed by the trust.

Avoid Marital Interest In The Property Title

Keep in mind that properties are contingent upon marital rights, which means that marital strife can create problems regarding the entitlement of the property.

However, a trust agreement will ensure that the trustee performs all processes dealing with the property itself. In a nutshell, the spouse is only authorized to get certificates of beneficial interest and not the property itself in the event of marital strife.