ILLINOIS LAND TRUST
By Kevin Kete w/ permission from www.InvestWithPassion.com
If so, consider an Illinois Land Trust just as you might choose to safeguard important papers or other personal property in a safety deposit box. An Illinois Land Trust provides a ‘vault’ for the protection of your real estate assets, arguably everyone's most valuable investment.
A land trust is a simple and inexpensive arrangement under which real estate owned, or about to be acquired, in Illinois can be transferred to a special type of trust. Under this arrangement, the trustee becomes the legal title holder to the property. However, the trustee holds the property for the benefit of the beneficiary of the trust and acts only on the direction of the beneficiary. (In general, the beneficiary is the person or persons who first establish the land trust.) Plus, the advantages of direct ownership of the real estate, such as the homestead exemption and senior citizen exemptions, are all retained and you stand to gain many more benefits with a land trust.
The benefits of using an Illinois Land Trust include:
1. Elimination of Probate Expenses and Delays
The land trust agreement allows the beneficiary of the trust the flexibility to designate the succession of ownership exactly as desired. For example, the beneficiary may designate his/her spouse, children or other successors. By transferring the real estate through a land trust, successors can bypass costly and time consuming probate proceedings relating to the property and thereby deal immediately with the property. This can help avoid insurance, real estate taxes and utility bills which would be payable during a probate period.
2. Insulation from Liens and Judgments
Under applicable laws, liens, claims, judgments and other such matters against an individual will automatically attach to any real estate owned in the name of that person - either individually or as a co-owner with others. This would make the sale or refinance of the property more difficult. If title to the same property is held in a land trust, legal matters affecting the beneficiaries do not pass through to the subject property.
3. Ease of Ownership by Multiple Owners
When dealing with matters of title to real estate which is owned by more than one person, such as when the property is sold, it is generally necessary for all of the owners to sign applicable paperwork. However, if the property is held in a land trust, the beneficiaries may designate one or more of them to direct the trust to sign paperwork in connection with the title. This may be of real benefit when it is not always practical to have all owners available to sign documents.
4. Ease of Selling, Transferring Interests and Use as
Collateral
The beneficiary's interest in a land trust is considered a personal property interest under the law. As such, it makes the transfer of the beneficiary's interest easy to accomplish, as the underlying property ownership can be transferred this way rather than by deed. This could also be helpful if the beneficiary wants to assign his/her interest as collateral to secure a loan, or if the beneficiary wants to make annual gifts of fractional interests in the property to grandchildren or others.
5. Confidentiality
Because the legal owner of a property in a land trust appears in the public record only as a numbered land trust in the name of the trustee, the beneficiary's interest in the trust remains confidential. Many people believe that the nature and extent of their real estate holdings should be no less confidential than their bank account balance or the contents of their safe deposit box.
The costs of holding real estate in an Illinois Land Trust typically include an Acceptance & First Year Holding Fee and an Annual Holding Fee for subsequent years scaled according to the type of real estate and its market value. There is a fee charged for executing specific documents such as contracts, deeds, leases and mortgage documents. However, the need for document execution by a land trustee is usually infrequent. More important is the experience level of the land trust administration staff and as quick a turn around as is practicable.
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Kevin L. Kete is the Vice President of North Star Deferred Exchange which provides Qualified Intermediary services for investors to affect a tax deferred exchange. For more information, he can be reached at 312-242-6217 or via email at kkete@northstartrust.com.
Invest With Passion is Chicago's real estate investment resource for the new and experienced. More information can be seen on the website at www.investwithpassion.com, visit us today!
If so, consider an Illinois Land Trust just as you might choose to safeguard important papers or other personal property in a safety deposit box. An Illinois Land Trust provides a ‘vault’ for the protection of your real estate assets, arguably everyone's most valuable investment.
A land trust is a simple and inexpensive arrangement under which real estate owned, or about to be acquired, in Illinois can be transferred to a special type of trust. Under this arrangement, the trustee becomes the legal title holder to the property. However, the trustee holds the property for the benefit of the beneficiary of the trust and acts only on the direction of the beneficiary. (In general, the beneficiary is the person or persons who first establish the land trust.) Plus, the advantages of direct ownership of the real estate, such as the homestead exemption and senior citizen exemptions, are all retained and you stand to gain many more benefits with a land trust.
The benefits of using an Illinois Land Trust include:
1. Elimination of Probate Expenses and Delays
The land trust agreement allows the beneficiary of the trust the flexibility to designate the succession of ownership exactly as desired. For example, the beneficiary may designate his/her spouse, children or other successors. By transferring the real estate through a land trust, successors can bypass costly and time consuming probate proceedings relating to the property and thereby deal immediately with the property. This can help avoid insurance, real estate taxes and utility bills which would be payable during a probate period.
2. Insulation from Liens and Judgments
Under applicable laws, liens, claims, judgments and other such matters against an individual will automatically attach to any real estate owned in the name of that person - either individually or as a co-owner with others. This would make the sale or refinance of the property more difficult. If title to the same property is held in a land trust, legal matters affecting the beneficiaries do not pass through to the subject property.
3. Ease of Ownership by Multiple Owners
When dealing with matters of title to real estate which is owned by more than one person, such as when the property is sold, it is generally necessary for all of the owners to sign applicable paperwork. However, if the property is held in a land trust, the beneficiaries may designate one or more of them to direct the trust to sign paperwork in connection with the title. This may be of real benefit when it is not always practical to have all owners available to sign documents.
4. Ease of Selling, Transferring Interests and Use as
Collateral
The beneficiary's interest in a land trust is considered a personal property interest under the law. As such, it makes the transfer of the beneficiary's interest easy to accomplish, as the underlying property ownership can be transferred this way rather than by deed. This could also be helpful if the beneficiary wants to assign his/her interest as collateral to secure a loan, or if the beneficiary wants to make annual gifts of fractional interests in the property to grandchildren or others.
5. Confidentiality
Because the legal owner of a property in a land trust appears in the public record only as a numbered land trust in the name of the trustee, the beneficiary's interest in the trust remains confidential. Many people believe that the nature and extent of their real estate holdings should be no less confidential than their bank account balance or the contents of their safe deposit box.
The costs of holding real estate in an Illinois Land Trust typically include an Acceptance & First Year Holding Fee and an Annual Holding Fee for subsequent years scaled according to the type of real estate and its market value. There is a fee charged for executing specific documents such as contracts, deeds, leases and mortgage documents. However, the need for document execution by a land trustee is usually infrequent. More important is the experience level of the land trust administration staff and as quick a turn around as is practicable.
*********************************************************************************
Kevin L. Kete is the Vice President of North Star Deferred Exchange which provides Qualified Intermediary services for investors to affect a tax deferred exchange. For more information, he can be reached at 312-242-6217 or via email at kkete@northstartrust.com.
Invest With Passion is Chicago's real estate investment resource for the new and experienced. More information can be seen on the website at www.investwithpassion.com, visit us today!
posted by Team IWP | 10:08 PM
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