How to Use Land Trusts to Protect Your Personal Assets from Lawsuits
If for any reason you are involved in a lawsuit, litigators will always resort to using public records for real estate holdings to find out what assets you own. Using this information, they will fight tooth and nail to have your assets confiscated.
Having your assets on public records also makes you a target for lawsuits. A land trust provides the anonymity you need to keep your property safe.
What is a Land Trust?
A land trust refers to a legal arrangement where the trustee, usually a legal entity, owns an asset on behalf of another party. It happens under the instruction of the property owner.
There are two types of land trusts:
A Conservation Land Trust
In a conservation land trust, the owner gives up some rights over the use and development of the land. But the trustee does not take over the title.
The purpose of a conservation land trust is to protect natural, historical, or cultural resources from disruption.
A Title-holding Trust (Illinois Land Trusts)
In a title-holding trust, the trustee takes ownership of the said property. This arrangement shields the owner’s anonymity and protects them from legal proceedings. But the property owner maintains full control over the asset and any benefits derived from the property.
This land trust is revocable. The owner can change, modify, or terminate the legal arrangement as they deem fit.
Our focus will be on title-holding trusts.
What Documents Do You Need to Protect Your Personal Assets from Lawsuits?
Two documents are required when enforcing a title-holding land trust.
Trust Contractual Agreement
This is an agreement between the trustor and trustee. It stipulates the obligations, rights, powers, and duties of the involved parties.
A Deed in Trust from Trustor to Trustee
You will need to sign a Deed in Trust. This is a document that transfers legal ownership of your property. It confirms the trustee as the owner of the property, but only on paper. You maintain control over the asset.
What is the Process of Setting One Up to Protect Your Personal Assets from Lawsuits?
To keep your personal assets private using a land trust and get protection from lawsuits, you will need to sign the trust agreement first. Next, proceed to passing the Deed in Trust to your trustee.
With the finalization of these documents, the public records of the land titles office will no longer have you as the owner of the property involved. And therefore, there will be no public record of your interest in the property.
A land trust is a powerful and revocable tool to protect your property from lawsuits and keep you from being a potential target for litigators. It transfers ownership of your property to the trustee, but you maintain control of its use and distribution of any benefits that come from the property.
It’s easy to get started with the land trust. All you will need is a trust contractual agreement, and a Deed in Trust, and your name will be out of public records.
