Land Trust Services
The Illinois Land Trust is a device for holding and conveying title to real estate which is more desirable and advantageous than some of the more familiar forms of real estate ownership. Under a Land Trust agreement, title to real estate is held by the Trustee. However, the use and enjoyment of the property is retained by the beneficiary of the Land Trust. Although legal title is transferred to the Trustee, the Trustee can act only upon the written direction of the beneficiary. Typical duties which the Trustee can perform at the written direction of the beneficiary include holding title to parcels of real estate, execution and delivery of mortgages, notes, leases, assignments of rents, deeds, etc. Property which is transferred into the Land Trust may be presently owned by the beneficiary or, in the case of newly purchased property, may be transferred directly to the Trustee by the seller upon written direction of the buyer-beneficiary. In any event, the beneficiary retains complete control over the real estate. The Land Trust may be terminated at any time. Additional real estate may be added to the Land Trust at any time. All of the rights and conveniences of real estate ownership are retained by the beneficiary without the disadvantages of non-trust ownership.
The advantages of the Land Trust are:
- Interest is Personalty
- Multiple Ownership
- Simplicity of Conveyance
- Privacy of Ownership
- Protection Against Claims
- Partition Suits
- Non-Resident Ownership
- Disposition of a Part Interest
- Collateral for Financing
- Avoidance of Probate
Listed below are Land Trust forms that are available for download.
All forms are available in PDF format. If you don't have Adobe Acrobat Reader you can download it now.
- Albany Bank Trust Agreement
- Warranty Deed in Trust
- Letter of Direction
- Direction to Convey
- Facsimile Assignment for Recording
- Frequently Used Provisions for Completing Article I in Describing Beneficial Interest
- Procedural Guidelines for Establishing a Land Trust with Albany Bank & Trust Company, N.A.
- Assignment of Beneficial Interest
When title to real estate is transferred to the Trustee, the interest retained by the beneficiary is considered personal property. Many of the other advantages of the Land Trust are due to the fact that the beneficiary's interest is considered personalty rather than realty.
Since title to real estate is held in the name of the Trustee, the Land Trust is particularly useful in transferring real estate ownership where there is more than one owner. For example, four children may have inherited their parents' property. In order to facilitate the sale of the property, it may be placed in a Land Trust. Thus, only the Trustee need execute the necessary documents to complete the sale.
The same advantage exists where two or more persons own real estate in a partnership and wish to achieve an easier method of handling their real estate matters. An additional advantage of the Land Trust in cases of multiple ownership is that one or more of the beneficiaries may exercise power of direction on behalf of all of the beneficiaries, thereby facilitating management of the trust property.
Whenever real estate is bought or sold, it is generally required that both the owner and his spouse sign all necessary legal documents to complete the transaction. This is true even if the real estate is held in the name of one spouse alone. This burden can be eliminated by placing title in the name of the Trustee. In such an instance only the signature of the Trustee would be required. This is especially useful in instances of multiple ownership or when many parcels of real estate are to be held in trust. For example, a land developer purchases a large tract of land with the intention of subdividing the parcel into small individual lots for resale. By placing the original tract of land in trust, the developer can be relieved of the details of conveyance of the individual lots as they are sold.
The real estate owner is entitled to as much privacy in his real estate transactions as is the owner of stocks and bonds. Title to real estate need not be a matter of public record. The Land Trust provides an excellent method for acquiring or disposing of real estate without revealing the true owner's identity. Title is simply transferred to or from the Trustee upon the written direction of the beneficiary (buyer or seller.) This device is particularly useful in landlord-tenant relationships. Anonymity may also be desirable in real estate negotiations where knowledge of true identities might otherwise hinder the transaction.
Since the interest of a beneficiary in a Land Trust is personalty, the real estate is protected from judgments and liens against the beneficiary. This is particularly important where the beneficiary may be prone to lawsuits. For example, business owners may wish to protect their real estate interest against judgments and liens which arise in the course of their business dealings. The Land Trust will protect these interests. Of course, any property owner is subject to potential lawsuits and his real estate interests can best be protected through the Land Trust. Judgments and liens against a Land Trust beneficiary do not constitute a lien against the trust property since the beneficiary's interest is considered personalty rather than realty. The beneficiary's interest is not immune from the just claims of his creditors, however, and the Land Trust may not be used to defraud them.
Whenever two or more persons share in the ownership of real estate, there is always the possibility of differences of opinion as to the handling of their interests. Where these differences cannot be easily resolved, either owner has the right to seek partition, that is to sell the real estate and divide the proceeds. Real estate held in a Land Trust cannot be partitioned. Thus, each beneficiary is assured of retaining his interest in the real estate.
Since the interest of a beneficiary in a Land Trust is considered personal property, a non-resident of Illinois may own Illinois real estate and avoid Illinois probate by placing his Illinois real estate in a Land Trust. This same advantage exists for Illinois residents who "retire" to another state.
Once the real estate is placed in a Land Trust, it is not necessary to sign a deed or execute a real estate contract to transfer a beneficiary's interest. A beneficiary may merely assign his entire interest or any part of it to whomever he chooses.
Quite often the need arises to obtain a bank loan for various purposes. Banks prefer to hold collateral as security on the loans they make. Preferential interest rates are also available on secured loans. The beneficiary's interest in a Land Trust offers excellent security for a loan. The beneficial interest may be pledged as collateral without the additional need and expense of obtaining a mortgage. The beneficial interest may be pledged as collateral even where there is an existing mortgage against the real estate.
Unless real estate is held in joint tenancy, it is usually subject to probate upon the death of the owner even when the real estate is disposed of by will. However, when property is held in a Land Trust, probate is not necessary to pass title at the owner's death since the Land Trust agreement provides for succession of ownership upon the death of the beneficiary. For example, a man may create a Land Trust and name himself as beneficiary. Upon his death, the property will vest in his brother. Thus real estate may be passed at death from one person to another without the need for probate.
By providing for succession of ownership in the Land Trust, the beneficiary can be assured that whoever he chooses can enjoy the use of the real estate after the death of the beneficiary without being granted an immediate interest in the ownership of the property. This can be especially useful for providing for one's children and grandchildren. For example, a husband and wife may hold property in joint tenancy with rights of survivorship. Upon the death of the survivor, the property may vest in equal shares to his or her children. Thus, even when real estate is held in joint tenancy by a husband and wife, a Land Trust is an ideal device for assuring the later enjoyment of their real estate by the children.
If you feel that a Land Trust will be of benefit to you or if you are uncertain as to the advantages of a Land Trust, you are invited to call or visit our Land Trust Department to discuss your situation.
Phone: (773) 267-7300