Understanding: Land Trusts
Land Trust vs Traditional Trust
Setting up a “Land Trust” is simply another way of holding property, available in some states, including Illinois.
A land trust is different from a traditional trust because it does not address the client's other assets and is not a comprehensive estate planning vehicle. Land trusts are available and valuable for investing and commercial ownership, as well.
Under a Land Trust arrangement, the recorded title to the property is held by a trustee but all the rights of ownership are exercised by the beneficiary, who is typically the homeowner. The beneficiary’s interest is not disclosed to the public.
Can’t I just establish an LLC?
LLC’s are a common vehicle for property ownership, but do not offer the same privacy protection available with a Land Trust.
Additionally, if you are borrowing with a traditional home loan to purchase your residence, you will be able to obtain a loan on the same terms that you would if you were purchasing the property in you individual name; that might not be the case if you are establishing an LLC to hold your property.
Also, owning/establishing an LLC can have different tax consequences than owning property with a Land Trust. Consult with us and your accountant on these us issues.