A trust is basically a legal term and an agreement between one party that holds property and another party’s benefit. As per the order or the comment of the property owner, a land trust is a legal operation which will help to take the authority or the ownership of the property or a specific part of the property
Like any other type of trust, the terms and conditions are different and unique for each land trust. The process of buying or selling or managing a real estate property can be complicated, and the investor needs to give a lot of time for a better outcome. Therefore, in some states where landowners and real estate investors don’t want to face any kind of problems, they find a relatively simple solution, namely land trust. In simple words, land trusts are the most convenient way to give the rights and benefits of land ownership between two interested parties.
Parts of the land trust
After you know what is a land trust, it is important to identify the three main parts of it, which are given below.
- A trustee
- A beneficiary
The grantor is the original owner of the property that belongs to the trust. If the grantor sells or debts his or her holdings to the trust, then the beneficiary will receive complete ownership of the property. At that time, the beneficiary is free to sell, rent, or subdivide and improve the structure of the property with the help of local ordinances.
The trustee has control of the property, and he or she is the one who manages trust mostly. The beneficiary is the person who gets all the benefits from that property. That means the beneficiary gets all the income made from the land trust.
There can be some situations where you have to tell the name of the trustee of a land trust, but if you want to disclose the name of the trustee, and then you need to use a nominee trustee. The nominee’s name will appear on the document, and along with this, he or she will get a special power that allows them to file tax returns on behalf of the trust. The responsibility of the trustee is to send the tax returns of the trust to the proper tax agency.
Uses and benefits of the land trust
You can get several key benefits from the land trust. For starters, it will make sure that the land can be passed easily to the beneficiaries in the event of a divorce, death, or any kind of problems of a legal relationship. While they don’t offer complete legal immunity, the trust will provide some basic and legal protection for their beneficiaries as well.
Apart from this, the trust will also ensure the privacy of their beneficiary by ‘’shielding” their interest behind the “facade” of the trustee. They will make sure that the identity of the beneficiary will only be disclosed under certain circumstances.
Along with this, trust simplifies the transfer of interest or ownership stakes by reducing the need for formal deed transfers between beneficiaries. If a beneficiary thinks that he or she wants to sell his or her stack to his or her partners in the trust, then it can be done through a simple semi-private transaction with the help of them.
Some more benefits are mentioned below.
- You can get the privacy of ownership and non-resident ownership.
- You can avoid probate.
- In this way, you can avoid marital interest in the title.
- With the help of land trust, you can transfer the beneficial interest.
- It will provide partnership, corporation, and agricultural land use protection.
Some key considerations
- As per the command or order of the land ownership, the land trust will take legal ownership, stewardship, or partial control over the property.
- Title holding land trust can be used in order to protect the landowner anonymity, and it will also help to make sure that the property is out of probate.
- Conversation land trust is basically operated with the help of the management for the undeveloped land, and the main motive is to maintain natural resources, historical places, and public areas for the future generation.
- If the land trust is willing to receive the tax deduction for their charitable donation, then they have to use the conservation easements in order to transfer the development rights to the conservation.
- If the land trust accepts some conservation easement donations, then it may come under the increased scrutiny because of some incidents of fraud.
That was all about what is land trust and everything associated with it that you need to know if you’re thinking about taking a step towards it.