A land trust is a trust arrangement for real estate ownership. Land trusts offer real estate holders the advantages of legal ownership while also providing options to safeguard personal assets. Under a land trust, an individual or corporation can act as titleholder and trustee for a designated property, while the property owner becomes the beneficiary of the trust.
In a land trust, the beneficiary retains complete control of the real estate in the same manner as if the record title were in his or her name. The beneficiary may terminate the trust whenever desired and may add additional property to the trust as any time. The trustee executes deeds and mortgages and deals with the property only when directed in writing by the beneficiary.
When title to real estate is held in a land trust, the interest of the beneficiary, under the terms of the trust agreement, is personal property. Since the beneficiary’s interest is personal property, he or she may transfer it by assigning that interest without the formality of executing and acknowledging a deed.
Land trusts offer many benefits, such as owner protection and ease of conveyance. If the property in trust is owned by more than one individual, the title to the property may become faulty and un-merchantable because of death, legal disability, divorce, judgments, and other types of litigation affecting one of the co-owners. When the property is held in a land trust, a judgment against one of the beneficiaries does not automatically constitute a lien upon the real estate held in trust. Thus, a beneficiary is provided with an extra measure of protection against lawsuits. Additionally, a land trust provides a convenient means of mortgaging and selling a trust property without having to obtain deeds from all of the beneficiaries and their spouses.
Under a land trust agreement, the party creating the trust can retain sole control over the property during his or her lifetime, with provisions for succession in ownership becoming effective upon death without the expense of going through probate proceedings. Under a land trust, unless required by law, the identity of the real owner is not disclosed to the public, keeping parties involved confidential. A land trust also simplifies the common problem of disposing of a partial interest in property since the beneficial interest under a land trust can be transferred by assignment. The assignment of the beneficial interest eliminates the necessity of a deed.
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