Should I Put My Home in an Illinois Land Trust?
Should I Put My Home in an Illinois Land Trust?
If you own a home you may have heard of an Illinois land trust. We real estate and estate planning lawyers at Johnston Tomei Lenczycki & Goldberg LLC often see clients with land trusts. Sometimes the land trust is beneficial, sometimes it is not. Whether you should have a land trust or not is highly dependent on your goals and circumstances. If you are interested in an Illinois land trust, it is worthwhile to speak with an experienced real estate and estate planning lawyer such as the lawyers at Johnston Tomei Lenczycki & Goldberg LLC.
Illinois Land Trust Considerations
Here are the things to consider when you are reviewing the need for a land trust:
- Do you own real estate? This may seem obvious, but you should be the actual owner of the real estate rather than a renter. Some people consider land trusts that are titled in another’s name, but it is not possible to set up a land trust for yourself if someone else owns the property.
- Is the real estate located in Illinois? Illinois permits land trusts, and there are many organizations that offer land trust services. But to utilize an Illinois land trust, the property must be physically situated within the State of Illinois. If it is not, you will have to determine whether the state the property is located in permits a land trust, and then create the land trust with an organization located in that particular state.
- Do you plan to keep the property long-term? If you are going to sell the property soon, then it probably does not make sense to put the property in a land trust. However, it is best to speak with a real estate lawyer before making such a decision.
- Is your property already in trust or does it have a transfer on death instrument? If your property is currently in a trust or it has a transfer on death instrument on it, then some of the benefits of a land trust are redundant.
- Does anyone else own the property with you? If multiple people are owners of the property, everyone will have to be on board with the land trust.
Benefits of an Illinois Land Trust
Illinois land trusts offer the following benefits:
- Hidden ownership. The biggest existing benefit of an Illinois land trust is that it masks the owners of the property provided that the property was purchased in the name of the land trust rather than being deeded into it at a later point. Hiding ownership of the property is of particular importance to professionals such as doctors, lawyers, accountants, architects, or other professionals who may be the target of lawsuits. Of course, even for non-professionals privacy is an important concern so the hidden ownership appeals to just about everyone.
- Beneficiary designations. Land trusts permit beneficiary designations via an assignment of beneficial interest. This means you can name someone else to take the property when you die. The property will thus avoid probate, making Illinois land trusts a good tool for estate planning. If this is your only goal however, then there are more economical options such as Illinois transfer on death instruments.
Drawbacks of an Illinois Land Trust
Illinois land trusts have two primary drawbacks. First, when you initially take the property and any time you wish to change beneficiaries or sell the property, there is extra administrative steps to jump through with the land trust organization. This increases transaction time and fees.
Second, land trust organizations charge fees upon taking the property, changing beneficiaries, and selling the property. They also charge yearly maintenance fees. These fees can really add up, so if there are better alternatives to take then that is recommended to do so.
Alternatives to Illinois Land Trusts
If your goal with your real estate is to avoid probate, then there are three alternative options that are in many ways superior to a land trust. They are:
- Deed the Property to Your Revocable Trust. If you have a revocable trust in existence, then you can deed the property to your revocable trust and it will pass to your beneficiaries upon your death pursuant to the trust terms. This is a good option if you already have estate planning. This option simply requires the creation of the deed and recording of the deed. The one-time fee is much more economical than a land trust.
- Transfer on Death Instrument for Real Estate. You can also create a transfer on death instrument for real estate. A transfer on death instrument names beneficiaries of your real estate so that the real estate automatically passes to the beneficiaries upon your death. These can be created by an estate planning and real estate lawyer such as the lawyers at Johnston Tomei Lenczycki & Goldberg LLC. The transfer on death instrument needs to be executed in the same fashion as a Will and it needs to be recorded to be valid. You can name your intended beneficiaries to receive the property or your revocable trust. Read more about transfer on death instruments here.
- Create a Business Entity. If you are looking to mask ownership of the property you can create a business entity such as a limited liability company to hold the property. Limited liability companies have their benefits, but you may miss out on tax incentives and other concerns, so it is highly advisable to speak with a business attorney before taking this route.
Contact the Illinois Land Trust Lawyers at Johnston Tomei Lenczycki & Goldberg LLC Today
If you are interested in the benefits of Illinois land trusts or their alternatives, then speak with an experienced Illinois land trust lawyer such as the lawyers at Johnston Tomei Lenczycki & Goldberg LLC. We will advise you of the available options and help you determine which option is best for your needs. We will create the necessary documents and ensure your plan is put in place. Call us today at (847) 596-7494 to learn more.