A land trust is a legal arrangement used to hold title to real estate for privacy, estate planning, and sometimes asset management purposes.
Unlike many other types of trusts, a land trust typically holds only real property — not cash, investments, or other assets.
Land trusts are commonly used by:
- Real estate investors
- Property owners seeking privacy
- Individuals planning to transfer real estate outside of probate
- Land conservation organizations (in a different context)
Understanding how a land trust works is key to deciding whether it fits your goals.
How Does a Land Trust Work?
In a typical land trust:
- The property owner transfers title of the real estate into the trust.
- A trustee holds legal title to the property.
- The original owner remains the beneficiary of the trust.
- The beneficiary retains control over the property.
The trustee’s role is usually administrative — they act only at the direction of the beneficiary.
Why Do People Use Land Trusts?
1. Privacy
One of the main reasons property owners use land trusts is privacy.
When property is held in a land trust:
- The trustee’s name appears on public records.
- The beneficiary’s name does not typically appear in recorded deeds.
This can provide a layer of confidentiality for real estate ownership.
2. Avoiding Probate
If structured properly, a land trust can help real estate pass to beneficiaries without going through probate.
Upon the death of the beneficiary:
- The beneficial interest in the trust transfers according to the trust terms.
- The property itself does not need to be re-deeded through probate.
3. Ease of Transfer
Instead of recording a new deed, the beneficial interest in the trust can often be transferred by assignment.
This can simplify ownership changes in certain circumstances.
4. Real Estate Investment Structuring
Investors sometimes use land trusts to:
- Hold individual properties separately
- Maintain confidentiality
- Pair with LLC ownership structures for liability planning
Often, the beneficial interest of a land trust is owned by an LLC, combining privacy and liability considerations.
What a Land Trust Does NOT Do
It’s important to understand what a land trust is not.
A land trust does not automatically:
- Protect against creditors
- Eliminate property taxes
- Avoid mortgage obligations
- Replace comprehensive estate planning
In some cases, lenders may need to be notified of title transfers depending on the mortgage terms.
Is a Land Trust the Same as a Conservation Land Trust?
No.
A conservation land trust is a nonprofit organization that acquires land for environmental protection.
A real estate land trust (discussed here) is a private trust used to hold title to property.
They are very different structures.
Are Land Trusts Recognized in Every State?
Land trust laws vary by state.
Some states, like Illinois and Florida, have well-developed land trust statutes. Other states recognize them through general trust law but may treat them differently.
Because state law matters, proper drafting and compliance are essential.
Example: How a Land Trust Might Be Used
Imagine a property owner who:
- Owns multiple rental properties
- Wants privacy in public records
- Plans to leave the properties to children
The owner transfers each property into a separate land trust and names their revocable living trust as the beneficiary.
This structure can help coordinate privacy, probate avoidance, and long-term planning.
The Bottom Line
A land trust is a flexible tool for holding real estate that can provide privacy and estate planning benefits when properly structured.
However, it is not a one-size-fits-all solution and does not replace broader asset protection or estate planning strategies.
If you are considering using a land trust for real estate you own or plan to purchase, it is important to understand how it interacts with state law, mortgage agreements, and your overall estate plan.
