What Is A Land Trust?

How to Establish a Land Trust

You can set up your land trust at the time the property is purchased or at a later date. You will need to execute a Land Trust Agreement and have the property deeded into the trust. We can provide you or your attorney with the necessary forms either by fax (call our Trust Department at 815-935-8000) or you may download them from this site.

In setting up your land trust you should consider two important items:

1) Naming a contingent beneficiary to succeed your interest to upon your death and

2) Naming someone to hold the power to direct the trustee to execute deeds and documents that deal with the title to the property.

How a Land Trust Operates

Under a Land Trust Agreement, the Beneficiary retains complete control of the real estate in the same manner as if the recorded title were in his or her name. The Beneficiary may end the trust whenever desired, or may add additional property to the trust at any time. At all times the Beneficiary deals with the property as though he or she were the record title owner, as a matter of fact, he or she is the owner. The Trustee, only when directed in writing by the Beneficiary, executes deeds and mortgages and deals with the property as so directed.

When title to real estate is held in a Land Trust, the interest of the Beneficiary, under the terms of the Trust Agreement, is personal property. Because a Beneficiary's interest is personal property, the Beneficiary may transfer that interest or part thereof by simply executing an Assignment of Beneficial Interest without the formality of executing and acknowledging a deed. Additionally, the Beneficiary's spouse need not join in such assignment for the purpose of releasing dower, as no dower attaches to the Beneficiary's interest in the Trust.

Some Frequently Asked Questions

Who can be a beneficiary of the land trust?

• Any person or entity that can legally enter into a contract can be the beneficiary of a land trust. That includes, individuals, partnerhships, joint ventures, limited liability companies, corporations, 401(k) Plans, and living trusts.

I want to leave my beneficial interest to my niece on my death. How do I do that?

• You would use language similar to the following when setting up the trust ownership: Jane Doe as to one hundred percent (100%) and upon her death to Molly R. Doe. This will insure that the beneficial interest goes to your niece, Molly, if she survives you, and this will occur without the necessity of probate.

How do I change the contingent beneficiary or beneficiaries on my existing land trust?

• You would need to make a simple amendment to the trust. A form to do so can be found in the forms section of this web site.

Do I have to pay a yearly fee?

• Yes. We charge a modest yearly fee to perform the duties of trustee. Even if there is no activity in your trust during the year, you still have the protection of the land trust 24 hours a day 365 days a year.

May a nonresident of Illinois be the beneficiary of a land trust?

• Yes. One of the main reasons nonresidents use a land trust to hold title to land in Illinois is to avoid the time and expense of probate. As an example, Joe has lived most of his life in Illinois but when he retired he moved to Florida. He still has a piece of commercial property in Illinois which he wants to leave to his children when he dies. Being a pretty alert fellow, years ago Joe had a will drawn which leaves the commercial property to his children. Joe thinks he's got the situation pretty well covered, but what Joe is forgetting or doesn't realize is that now that he is a resident of Florida his estate will be probated in Florida. This means that because the commercial property is in Illinois the children will also need to open a probate estate in Illinois and hire (and pay) an Illinois attorney. Certainly not the result Joe would want if he thought about it. Joe can protect himself and his heirs by placing title to the commercial property in a land trust and naming his children as contingent beneficiaries. When Joe's time comes, his children will automatically control the property and there will be no need for probate in Illinois.

Must I be a resident of the United States to be the beneficiary of an Illinois land trust?

• No, and that is another benefit of a land trust. Your mother in India can own property for which the title is held in an Illinois land trust. She can grant you, her daughter, the power of direction to manage the property. She might also want to leave the property to you and your brother on her death. This is also simply and easily done through a land trust.

How do I take the property out of the land trust?

• You issue a letter of direction to the trustee to convey the property back to you.

‍