IS THE SECRECY OF A LAND TRUST LAWFUL? RANDY HUGHES
carry with it some responsibilities (i.e. to maintain,
By structuring the Land Trust with an LLC or
comply with building codes, meet minimum housing
Corporation as the beneficiary, the real estate
standards, etc.), it should not be a target source for
investor creates a unique structure with symbiotic
contingency fee lawyers and other frivolous legal
benefits. For example, changing ownership of the
attacks.
beneficial interest being held by an LLC, would
effectively change the owner/control of the title
holding
Land
Trust
without
public
notice
or
knowledge. Not only would this be a deeply private
transfer of ownership and control, but taxing
authorities would be left out of the loop resulting in
substantial tax savings!
Some theorists contend that property should be
owned only in individual names so the “public good”
can be served by holding owners accountable for
what occurs on property (liability for people and
condition). At the Federal level some even refer to
Furthermore,
some
real
estate
investors
are
two statutes of importance: The Freedom of
concerned about Federal and State government
Information Act (1976) and the Privacy Act of 1974
intrusion in their lives (read: Patriot Act). Since there
as reasons to compel ownership in the name of
is no requirement to itemize specific property
individuals and not trusts, or at least limit the privacy
ownership details on your IRS 1040, holding real
of Land Trust’s through legislation.
estate in a Land Trust keeps the investor’s name out
of all city, county, state and federal databases.
Since Land Trusts are not registered at the State or
Federal level, unlike Limited Liability Companies
(LLC’s) and Corporations, they are the last useful
non-entity entity available to owners of real property
(land, improved property, commercial buildings,
residential buildings, real estate options, real estate
contracts, etc.). Yes, LLC’s and Corporations offer
more direct asset protection benefits, but the Land
Trust provides more privacy of ownership and
indirect asset protection benefits. Therefore, it is best
to link Land Trusts, LLC’s and Corporations together
for the best of both worlds.