Land Trusts in Real Estate: How to Use Them for Privacy, [Asset Protection](/blog/real-estate-llc-guide), and Estate Planning

If you own rental properties — or even just your primary residence — your name, address, and ownership details are public record. Anyone can look up who owns a property through the county recorder's website. Creditors, litigants, and solicitors regularly mine this data.

A land trust is one of the simplest ways to remove your name from public property records while gaining other benefits for estate planning and [property management](/blog/property-management-complete-guide). Here's how they work, what they actually protect (and don't), and how to set one up correctly.

What Is a Land Trust?

A land trust is a legal arrangement where a property is held by a trustee for the benefit of a beneficiary. The trustee holds legal title (their name appears on the deed and public records), while the beneficiary holds equitable title (they control the property and receive its benefits).

The concept originated in Illinois in the 1800s, which is why you'll sometimes hear them called Illinois land trusts. Today, about a dozen states have specific land trust statutes, but land trusts can be created in any state using general trust law principles.

The Three Parties

1. Trustor/Grantor: The person who creates the trust and transfers property into it. This is usually the current property owner.
2. Trustee: The person or entity that holds legal title. This can be a friend, family member, attorney, title company, or professional trustee service. The trustee's name is what appears on public records.
3. Beneficiary: The person who actually controls and benefits from the property. This is usually the original owner. The beneficiary's identity is not recorded in public records.

How It Differs From Other Trusts

A land trust is specifically designed for real property. Unlike a revocable living trust (which can hold bank accounts, investments, and personal property in addition to real estate), a land trust typically holds a single piece of real estate.

Key differences from a revocable living trust:

• Privacy focus. The primary purpose is keeping the beneficiary's name off public records.
• Single asset. Best practice is one property per land trust.
• Simpler structure. Less documentation than a full living trust.
• No probate avoidance by default. Unless the trust agreement includes succession provisions, the beneficial interest may still need to go through probate.

Benefits of Using a Land Trust

1. Privacy of Ownership

This is the number one reason people use land trusts. When you transfer property into a land trust, the deed shows the trustee's name (often something generic like "ABC Trust Company, as Trustee of Trust #1042"). Your name doesn't appear anywhere in the public record.

This privacy is valuable for:

• Real estate investors who don't want tenants knowing their personal address or how many properties they own
• Public figures who want to purchase property without media attention
• Anyone concerned about personal safety (domestic violence survivors, for example)
• Negotiation advantage — when buying multiple properties in an area, sellers can't tell it's the same buyer and inflate prices

2. Avoiding Due-on-Sale Clause Issues

The Garn-St. Germain Depository Institutions Act of 1982 (12 U.S.C. § 1701j-3) prohibits lenders from enforcing due-on-sale clauses when property is transferred into certain trusts — specifically, transfers to an inter vivos trust where the borrower is and remains a beneficiary and the trust doesn't relate to a transfer of occupancy rights.

This means you can transfer a property with an existing mortgage into a land trust (where you remain the beneficiary) without triggering the due-on-sale clause. This is a significant advantage over transferring property directly to an LLC, which can trigger due-on-sale enforcement.

3. Simplified Estate Transfer

The beneficial interest in a land trust is treated as personal property, not real property. This matters because:

• Personal property is generally easier and cheaper to transfer than real property
• In some states, transferring the beneficial interest doesn't require a new deed, recording fees, or transfer taxes
• You can name successor beneficiaries in the trust agreement, which may allow the property to pass outside of probate

4. Protection From Some Liens

In Illinois and states that follow the Illinois land trust model, judgments against the beneficiary may not automatically attach to the trust property. A creditor would first need to discover that you're the beneficiary, then take additional legal steps to reach the property. This doesn't prevent attachment — it just makes it harder and more expensive for creditors.

Important caveat: This is not bulletproof asset protection. A determined creditor with a good attorney can pierce a land trust. More on this below.

5. Easier Partition Prevention

When multiple people own property, any co-owner can typically force a sale through a partition action. When property is held in a land trust, the trust agreement can include provisions that restrict or make partition more difficult, protecting co-owners from forced sales.

What Land Trusts Don't Protect Against

Not a Liability Shield

A land trust is not an LLC. It provides zero liability protection. If someone slips and falls on your rental property, they can sue the trust and ultimately reach you as the beneficiary. The trust doesn't create a separate legal entity like a corporation or LLC.

Not Tax-Advantaged

A land trust is a grantor trust for tax purposes. All income, deductions, and capital gains flow through to the beneficiary's personal tax return. You don't get any additional tax benefits by using a land trust.

Not Impenetrable Privacy

While the beneficiary's identity isn't in public records, it's not impossible to discover:

• A court can order disclosure of the beneficiary in a lawsuit
• Insurance policies, property tax correspondence, and utility records may still be in your name
• Your mortgage lender knows you're the borrower regardless of the trust

Not Creditor-Proof

If you transfer property into a land trust while you have existing debts, it could be considered a fraudulent transfer under the Uniform Voidable Transactions Act. A court can reverse the transfer and allow creditors to reach the property. You cannot use a land trust to hide assets from existing creditors.

How to Set Up a Land Trust

Step 1: Create the Trust Agreement

The trust agreement is the core document. It should include:

• Name of the trust (can be generic — "Trust No. 2026-01" works fine)
• Identity of the trustee
• Identity of the beneficiary
• Powers of the trustee (usually limited to holding title and executing documents as directed by the beneficiary)
• Powers of the beneficiary (full management control, right to direct the trustee, right to income)
• Successor beneficiary provisions
• Terms for termination
• State law governing the trust

You can find land trust agreement templates online for $50–$200, but having an attorney draft or review the agreement ($500–$1,500) is worth the cost for investment properties.

Step 2: Choose a Trustee

Your trustee options:

• An individual (friend, family member, attorney) — free or low cost, but creates dependency on that person
• A title company — some offer trustee services for $200–$500/year
• A professional trust company — $300–$1,000/year, provides the most anonymity
• Yourself — technically possible in some states, but defeats the privacy purpose since your name would be on the deed

The best practice is to use a trustee who is not obviously connected to you. Using your spouse or business partner as trustee reduces the privacy benefit.

Step 3: Transfer the Property

Prepare and record a deed transferring the property from yourself to "[Trustee Name], as Trustee of [Trust Name]." In most states, a quitclaim deed is sufficient for this transfer. Some states charge transfer taxes on this conveyance, while others exempt trust-to-beneficiary transfers.

Step 4: Update Insurance and Tax Records

• Notify your homeowner's insurance company. The policy should name the trust as an additional insured.
• Many counties will allow you to keep property tax bills in the trust name. Some states require disclosure of the beneficiary to the tax assessor (but this information isn't publicly accessible in the same way recorded deeds are).
• If there's a mortgage, notify the lender. Provide a copy of the trust agreement showing you remain the beneficiary and occupant.

Step 5: Maintain the Trust

Land trusts require minimal ongoing maintenance:

• Keep the trust agreement in a safe place
• Ensure the trustee remains available and willing to serve
• Sign documents through the trustee when needed (or use a direction letter that authorizes the trustee to sign)
• Renew any annual trustee service fees

Land Trust vs. LLC: Which Is Better?

This is the most common question real estate investors ask. The answer is that they serve different purposes and work best together.

The Combined Strategy

Many experienced investors use both: property is held in a land trust for privacy, and the beneficiary of the land trust is an LLC for liability protection. This structure:

1. Keeps your name off public records (land trust benefit)
2. Protects you from lawsuits related to the property (LLC benefit)
3. Avoids due-on-sale clause issues (land trust benefit, since the deed transfer is to a trust, not an LLC)
4. Provides a clean management structure

The LLC is named as the beneficiary of the land trust. Since the beneficial interest is personal property (not real property), assigning it to an LLC typically doesn't trigger due-on-sale clauses or transfer taxes.

State-Specific Land Trust Laws

Not all states are equally friendly to land trusts:

States with specific land trust statutes:

• Illinois (the gold standard — most developed land trust law)
• Florida (Florida Land Trust Act, F.S. § 689.071)
• Virginia
• Indiana
• North Dakota
• Hawaii
• [California](/blog/california-heloc-guide) (but with significant limitations on privacy)

States where land trusts work well under general trust law:

• Texas, Colorado, Arizona, Georgia, Ohio, and most other states

States with complications:

• Louisiana uses Napoleonic Code and doesn't follow common law trust principles
• Some states require beneficiary disclosure in certain circumstances

Check with a local [real estate attorney](/blog/how-to-build-real-estate-team) to confirm land trust viability in your state.

Costs of Setting Up and Maintaining a Land Trust

For investors with multiple properties, the per-property cost drops significantly since you can reuse the trust agreement template and establish a relationship with a trustee.

Common Mistakes With Land Trusts

1. Using Your Own Name as Trustee

This completely defeats the privacy purpose. Your name will be on the deed as trustee, and anyone searching property records will find it.

2. Using the Same Trustee Name Pattern

If you name every trust "Smith Family Trust #1, #2, #3," anyone can see the pattern and connect all your properties. Use different trust names and, if possible, different trustees.

3. Forgetting to Update Insurance

If the property is in a trust but the insurance policy is only in your personal name, there may be coverage gaps. The trust should be a named insured.

4. Not Having a Successor Trustee

If your sole trustee dies or becomes incapacitated, you'll need to go to court to appoint a new one. Always name a successor trustee in the trust agreement.

5. Expecting Lawsuit-Proof Privacy

A judge can order disclosure of trust beneficiaries during litigation. Land trusts discourage casual snooping and nuisance suits, but they won't withstand a court order.

Frequently Asked Questions

Can I put my primary residence in a land trust?

Yes. This won't affect your [homestead exemption](/blog/homestead-exemption-guide) in most states, and you'll still qualify for the mortgage interest deduction and [capital gains exclusion](/blog/home-sale-exclusion-guide) when you sell (as long as you're the beneficiary and occupant).

Will a land trust affect my ability to get a mortgage?

If you're refinancing a property already in a land trust, some lenders may require you to temporarily remove the property from the trust, close the loan, and then transfer it back. For new purchases, you'd typically close in your own name and then transfer to the trust.

How many properties can one land trust hold?

Best practice is one property per trust. This prevents a problem with one property from affecting others, and it maximizes privacy since connecting multiple properties becomes harder.

Can a land trust own property in a different state?

Yes, but the trust should be governed by the laws of the state where the property is located. You may need a trustee in that state.

How do I sell property held in a land trust?

The trustee signs the deed to the buyer, as directed by the beneficiary. Alternatively, you can terminate the trust, transfer the property back to yourself, and sell normally. Or you can sell the beneficial interest itself (though buyers and their lenders typically prefer a conventional deed from the trustee).

Is a land trust the same as a conservation land trust?

No. A conservation land trust (or land conservancy) is a nonprofit organization that preserves land for environmental or historical purposes. It's a completely different concept from the privacy-oriented land trusts discussed in this article.

The Bottom Line

Land trusts are a straightforward, relatively inexpensive tool for keeping your name off property records. They're especially valuable for real estate investors who own multiple properties and want to maintain privacy, simplify estate transfers, and avoid due-on-sale clause issues.

But they're not a substitute for liability protection (use an LLC for that) and they're not impenetrable shields against determined creditors or court orders. Use them as one layer in a broader real estate strategy — not as your only protection.

For a single rental property, setting up a land trust might cost $500–$1,500 with an attorney. For the privacy and flexibility it provides, that's a reasonable investment for most property owners.

Related Articles

• Property Taxes Explained: How They Work and How to Reduce Them
• [Complete Guide to [Rental Property Tax Deductions](/blog/rental-property-accounting-guide) for Landlords (2026)](/blog/rental-property-tax-deductions)
• [The Complete Rental [Property Tax Guide](/blog/property-tax-guide) for 2026: Every Deduction, Schedule, and Strategy](/blog/rental-property-tax-guide-2026)