Death and Taxes - The Blog

Introduction to Land Trusts

Christopher Yugo has a nice introduction to land trusts -- including advantages and disadvantages -- here.  Land trusts are only used in a few states (Illinois is one, and evidently Indiana is another), but as Mr. Yugo says, they can be useful in certain situations.  That being said, I still usually prefer to use living trusts.  Living trusts can hold real estate AND other assets, and since you are typically the initial trustee (with a spouse or other family member as successor), there's no issue of trustee fees.

Judges, Land Trusts, and Privacy

The big story in the Chicago area this week is the horrifying murders of the husband and mother of U.S. Judge Joan H. Lefkow.  Murder is heinous enough on its own, but the possibility that these crimes were committed in an attempt to silence Judge Lefkow takes things to another level.

This Chicago Tribune article (registration may be required) discusses how judges have to deal with privacy issues in the internet age.  One of the biggest problems I see is the easy accessibility of information about real estate transactions -- it's child's play to find out where an individual lives, when she bought her house, how much she paid for it, and even whether she is up to date in paying her real estate taxes.  When the individual in question is a judge or prosecutor, this easy accessibility can be a real problem.

I wonder whether we're going to see land trusts become increasingly popular among public figures who fear for their privacy and safety.  Essentially, a land trust is a vehicle for holding real estate as non-probate property.  (You can read more about land trusts at the State of Illinois Division of Banks and Real Estate's website, here.)  Land trusts have a number of drawbacks (they can only hold real estate, and you need to pay fees to a corporate trustee), but they have one huge advantage over living trusts: privacy.  I can set up a land trust with a bank, and then purchase property in the trust's name (rather than my own).  After doing so, a public record search might reveal that my property is owned not by "Joel A. Schoenmeyer" but by "Bank X, as trustee of trust no. 092701."  State law protects my identity by preventing its disclosure except in certain limited situations.

Probably the biggest impediments to setting up a land trust are the other parties to the transaction (your lender and the seller).  You'll want to make sure your lender and your seller will allow you to take title in a land trust before you sign a contract to purchase.  You can always have the property conveyed to you individually and then place it into a land trust, but prying eyes may be able to put 2 and 2 together and figure out that you have done so.