California real estate investors and property owners have their reasons for keeping ownership private or ensuring that assets transfer outside of probate. A land trust can meet these goals, but it’s important to understand what it does—and what it doesn’t do.
While land trusts may provide limited anonymity, they do not offer true asset protection unless they’re structured in conjunction with other legal tools that do offer protection. Knowing how a land trust functions is key to putting the right strategy in place for anyone managing multiple properties or trying to streamline their estate plan.
What is a Land Trust?
Some states, such as Illinois, do recognize land trusts. However, in California, a land trust is a type of revocable living trust designed specifically to hold real estate. Like other living trusts, it allows the grantor to retain control during their lifetime and make changes as needed. But unlike broader trusts that may include financial accounts or personal property, land trusts are focused exclusively on real estate assets, such as residential or commercial property.
There are a few distinct forms of land trusts, but the most popular, a title-holding land trust, is used to keep ownership information out of public records. In this structure, you transfer real estate to a trust with a non-descriptive name (excluding any relation to you). While common practice to list a trustee as the grantee of the property on behalf of a trust, this is not a legal requirement. Behind the scenes, a trustee holds the legal title to the property, while the grantor (you) remains the beneficiary with full control.
It is worth noting that a savvy litigator will search land records and see that you transferred the property to the land trust, and that there was no property tax reassessment (the County Assessor lists this information), and can almost safely assume that you have a beneficial ownership in the property. This means, again, that there is limited anonymity.
Proper Structure and Execution of a Land Trust
Although a land trust can hold valuable property, it provides no legal shield against creditors or lawsuits on its own. That’s because revocable trusts can be changed or revoked by the grantor (you) at any time, and courts generally see through them in asset protection cases. The privacy they offer—by keeping the grantor’s name off public land records—is useful, but it’s not the same as liability protection.
To add protection, some grantors choose to have the ability to assign as a power within the trust, or shortly after setting up the trust, actually assign beneficial ownership of the land trust to a Wyoming LLC. Wyoming offers strong asset protection laws and potential anonymity for LLC members. When set up and assigned or triggered properly, the LLC—not the individual—becomes the beneficiary of the land trust. This separates the control and benefit of the property from personal ownership and adds a layer of liability protection that a land trust alone cannot provide.
Maximizing Asset Protection and Legal Structure for Your Land
A land trust can be valuable to an overall real estate strategy, but only when paired with the right legal structure. Incorporating an LLC as the trust’s beneficiary, or reserving the power to do so at a later date, is a smart move for property owners who want both privacy and liability protection. The proper setup preserves your control while shielding your identity as an owner. Contact Dahl Law Group to properly manage, protect, and transfer your real estate assets that actually protects what you’ve built.
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