If you’ve been searching for a way to keep your real estate holdings private, it’s wise to consider land trusts. These legal structures help you hide your real estate from lawyers and creditors without relinquishing control of your assets.
Although you may have heard about land trusts and their benefits, you may not know how they’re established. Fortunately, Asset Protection Planners is here to guide you through the process.
- Basic Structure of a Land Trust
- How to Set Up a Land Trust: A Step-by-Step Guide
- An Example of Our Land Trust Setup Process
- What to Do When You Receive Your Land Trust
- Why You Should Establish an LLC Alongside a Land Trust
Basic Structure of a Land Trust
Before learning how land trusts are established, it’s critical to know how they are structured. Like most other trusts, land trusts involve three parties:
- Grantor/Settlor: The settlor (also known as a grantor) is the person who creates the trust and usually owns the property going into it.
- Trustee: A trustee is a person or entity that controls the trust assets. Though it may sound like a powerful position, trustees are bound by trust agreements. Their actions are governed by the terms outlined in the agreement or instructions given by the beneficiary. We often utilize a private LLC as the trustee.
- Beneficiary: A beneficiary is anyone who receives a benefit, such as a disbursement, from the trust. For example, if the property is sold, the beneficiary would receive the proceeds. In a land trust, the settlor can be a beneficiary, which enables them to derive value from the property without disclosing ownership.
Land trusts are also governed by two key documents, including:
- The trust agreement: A trust agreement names the trustee and any beneficiaries. It also outlines the trustee’s powers and responsibilities. Trust agreements don’t have to be filed in the public record and are often stored at the settlor’s home.
- A deed: Deeds serve as legal proof of real estate ownership. When a land trust is formed, the deed transfers the property to the trust/trustee. If someone searches the public record to see who owns a piece of property within an appropriately structured land trust, they will not see the settlor’s name.
Another document, known as an “assignment of beneficial interest,” transfers one’s interest in the trust to another party. This document is not always used in land trusts, but it can be used to name a new beneficiary, such as a person or LLC.
Learn more about the Pros and Cons of Land Trusts for Privacy for Your Home and Rental Properties.
How to Set Up a Land Trust: A Step-by-Step Guide
Creating a land trust is easy, provided you follow these steps:
- Find a trust establishment professional: Never establish a trust without professional help. If you attempt to DIY your trust setup, you could make a mistake that renders it ineffective. Asset Protection Planners has been setting up land trusts for years, and we’re happy to help you create yours.
- Identify your trustee and any beneficiaries: With the help of your trust establishment professional, you’ll select a trustee and any beneficiaries. We recommend having our Wyoming LLC serve as the trustee.
- Draft the trust agreement: Your trust agreement, which should be drafted by a professional, outlines trustee powers. This document also lists the trustee, beneficiary, and any assets that will be held in the trust.
- Transfer property to the trust: Once your trust structure is in place, it’s time to move your assets into it. Transfer the title deed to the trust to remove your name from public ownership records and retain control over the property.
- Keep detailed records: You and your asset protection professional need to keep detailed records of management tasks and trust-held assets. Doing so generates a paper trail that can be used to prove the validity of your trust if you are ever sued.
By following these steps, you can set up a land trust that keeps your name off property records
An Example of Our Land Trust Setup Process
When you ask us to set up a land trust, our legal department will send you a questionnaire. This document will request the following information:
- Trust name: The name of a trust is usually the property’s address with the word “Trust” added to it. For example, if you lived at 123 Main Street, you would probably name the trust “123 Main Street Trust.” There’s no need to worry about the address revealing private information, as the address itself is publicly listed.
- Your name and contact information: Next, we ask for your name and contact details so we’ll know who to send the documents to once they’re completed.
- Trustee name and address: You can select a person to be your trustee, but it’s best to have a private company fill this role. We recommend this course of action because it allows you to control the trust without putting your name on it.
- Settlor information: Usually, this will be you. When we request this information, ensure there are no spelling errors, as your name must match the name on the title document exactly.
- List of beneficiaries: Finally, we request the names of any beneficiaries and the property address. If you are the trust settlor, you can also be a beneficiary.
If you’d like, we’ll set up a private LLC in Wyoming to act as the trustee. Our Wyoming LLCs have nominee managers to keep your name out of the public records. This strategy gives you both privacy and power over the trust. We also set up a virtual office with a Wyoming-based phone number and address to further legitimize the LLC.
Once we have all of that information, we’re ready to set up the trust structure! We’ll guide you through the process of funding the trust and transferring your real estate.
What to Do When You Receive Your Land Trust
We usually email the land trust to you. Once you receive it, open the attachment, print it out, and follow these instructions:
- Review the document to ensure that your name and any addresses are correct.
- Write the date on your trust.
- Select the proper deed type (quitclaim, grant deed, or warrantee deed) for your state.
- Visit a notary public to sign the land trust and deed.
- Record the deed in the public records of the county where the property is located. Remember, you only have to record the deed, not the trust.
- Place the land trust documentation into a safe deposit box or filing cabinet in your home.
Once all this is done, the property will be titled to the trust, and a public records search won’t show you as the property owner.
Why You Should Establish an LLC Alongside a Land Trust
A land trust is not an asset protection device. It is a privacy device that keeps your name out of the public records. Since it doesn’t protect assets, it leaves beneficiaries open to liability. However, if you choose to use an LLC as the beneficiary, the company is exposed to liability, not you. Plus, when someone sues you personally, the LLC can offer true asset protection.
However, we don’t recommend assigning beneficial interest to an LLC if you are putting your primary residence in a land trust. A personal residence is in a different tax category than an investment property. The benefits of maintaining a beneficial interest in the land trust include:
- The ability to write off interest on your home mortgage.
- The option to sell the property and not pay taxes on part of the gains.
If you plan to put your primary residence in a land trust, we recommend retaining your beneficial interest. It’s best to only assign beneficial interest to an LLC for rental and secondary properties.
Call Asset Protection Planners for Help Setting Up a Land Trust
Need help keeping your name out of the public record? Asset Protection Planners is here to help! Our team has set up hundreds of land trusts across the country. You can count on us to establish a trust that keeps your real estate far away from the prying eyes of contingency fee lawyers and creditors.
Don’t leave your property records out there for anyone to find. Click the button below to see how we can help you establish your land trust today.
