If you are finding yourself asking “what is a land trust?” you are not alone. Also called an Illinois land trust because of its origin, a land trust is a legal document that assigns anonymous land ownership to a beneficiary. 

A land trust was created in the Chicagoland area in the 19th century so that real estate investors could circumvent the law regarding land ownership and voting. During that time, there was a law to try to protect private interests from influencing city planning. The law prohibited land-owners from voting on city projects if they owned land in the area. Savvy landowners created land trusts in order to get around this law, which allowed property ownership information to remain private.

A land trust is created by a trustee and gives land ownership rights to a beneficiary. The beneficiary becomes the new landowner and maintains all property rights regarding managing, buying, and selling the property. However, since the beneficiary owns the property through the trust, the land is considered “personal property” and it is not as complicated to manage as regular real estate property.

What Are the Benefits of a Land Trust?

An Illinois trust can open the door for numerous benefits for real estate investors as well as property owners who would like their beneficiaries to avoid the stressful probate process that wills are subject to. Land trusts also simplify joint ownership and are highly recommended for people who plan to share ownership of a property.

Protection of Anonymity

Many people opt for a land trust in order to keep ownership information private. When a trust is created, the Deed in Trust, which is public information, does not directly state the name of the beneficiary. Instead, the deed simply states that the property is owned by a land trust. Additionally, since the trust skips the public probate process that regular real estate may be subject to, it further protects the privacy of ownership. 

Public figures and celebrities often purchase land through a trust so that they can remain anonymous. Real estate investors who are purchasing land for unpopular reasons find land trusts particularly enticing. 

What is a land trust and why do celebrities like to purchase land that way?

Protection Against Liens

People who plan to jointly own property are advised to set up a land trust because it provides an extra barrier of protection from the property being subject to liens to satisfy debts of one of the owners. This protection does not extend to debts towards mechanics liens such as contractors and suppliers.

Ease of Ownership Succession

Since the ownership of land is passed through a trust and not a will, the succession of ownership is not subject to the tedious probate process in which courts determine the validity of a will. This makes the trustee’s death less stressful for their beneficiaries and guarantees proper succession of ownership.

Ease of Real Estate Management

During the selling and conveyance process, a land trust does not require the beneficiary to obtain deeds and permission from all of the deed owners and their spouses. In Illinois, real estate cannot be sold without the consent of the trustee or agreement by all beneficiaries if dictated by the trust. Additionally, land trusts allow the trustee to assign partial interests to investors by naming them as beneficiaries. If a group of investors is subject to frequent changes, this makes the transference of ownership significantly less complicated by allowing the trustee to modify the beneficiaries in the trust agreement as opposed to altering the deed to transfer ownership. Although, transfer of ownership may still need to be approved by all beneficiaries and at the trustee’s consent.

Invest in the Future of Your Property

With the help of a qualified real estate law attorney in Illinois, you can rest assured knowing that your trust was created following the necessary legal protocols to guarantee its validity. 

Schottler Associates serves the Chicagoland, Riverside area and has more than twenty years of experience in real estate law. If you are uncertain if a land trust is right for you, or if you have any questions regarding your unique needs, then we invite you to sign up for a free 30-minute consultation. During this time we will assess your situation, answer your question “what is a land trust?”, and provide you with qualified legal advice regarding your next steps.

Mark Schottler is a Chicagoland attorney with over 20 years of experience working both in probate and estate planning law and in real estate law. He puts his extensive knowledge on these subjects into easily consumable articles that will help and advise the public. Mark Schottler has a passion for probate and uses this to create relevant articles that are informative and entertaining. *While these posts may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.