A trust is a tool used in estate planning that can avoid probate and provide a benefit for a beneficiary or group of beneficiaries. The requirements of a trust vary from state to state.
Trusts may be created for many reasons, including:
As noted above, requirements for creating a trust vary by state. However, each state typically includes several necessary elements, such as:
A settlor is an individual who establishes a trust. This individual may also be known as:
In order for a trust to be valid, a settlor is required to have the proper mental capacity to create a trust. The settlor must have intended to create the trust with any necessary formalities of the state, which includes being in writing.
A trust is required to contain specifically identifiable property, known as trust res. The property must be described with enough detail or a specific enough description to know exactly what property is held in the trust.
In addition, a beneficiary or group of beneficiaries of the trust must be sufficiently identifiable. The beneficiary or beneficiaries must be determined at the time the trust is created. It is important to note that this is not typically a requirement for a charitable trust creation.
A trust must be created for a proper purpose. It cannot be created for an illegal purpose. For example, an individual cannot create a spendthrift trust to hold property in their own name for their own benefit just to keep their creditors from reaching their assets. In most cases, a court will hold that such trusts are invalid.
Generally, all trusts in the United States are presumed to be irrevocable trusts unless otherwise stated in the instrument. However, some states presume a trust is revocable unless otherwise stated in the instrument, such as:
Any individual may be a beneficiary of a trust, as long as they are property named as such in the trust document. Many individuals list people close to them as beneficiaries, such as:
However, there are also other individuals that may be beneficiaries, including:
The beneficiary or beneficiaries of a trust must be definite and certain. In other words, they must be ascertainable at the time of trust creation. The description of a beneficiary must be specific and detailed enough for a court to determine who the beneficiary is with specificity.
A land trust is a non-profit conservation organization that protect different items, such as:
Land trusts work to permanently protect property by several means, including:
A land trust is a living trust. It can only own real estate or assets related to real estate. Most land trusts utilize a third party, such as a bank, as the trustee.
A trustee is generally bound to do what the beneficiary, or the actual owner of the land, tells the trustee to do. This is different from a family trust, which is controlled by a trustee. A land trust is revocable, which means the owner can remove the asset from the trust at any time.
A land trust is typically organized as a charitable trust. As noted above, it protects several different types of property. A land trust protects land by means such as:
A land trust’s non-profit status provides the land trust a variety of tax benefits. In addition, those who donate to a land trust receive a number of tax benefits.
Land trusts are also closely tied to the community. It usually works closely with local, state, or federal government organizations as well as the community when planning or acquiring property to conserve.
A major benefit of a real estate land trust is privacy. Once the title to a property is transferred into a trust, the names of the owners cannot be disclosed without a court order. This may also help an individual avoid litigation. In some cases, if individuals appear wealthy, other individuals may try to sue them for something in an attempt to gain wealth.
Additionally, in some states, multiple owners of a property are not punished by a legal judgment against only one of them. In a trust in these states, the property is shielded against legal actions against one owner.
A land trust may prove the same flexibility as owning the property outright. An individual may still buy and sell within the trust as if it was an asset they held in their own name.
A real estate land trust also provides ease of conveyance. In other words, it is easy to transfer ownership of a property to an heir without involving a lawyer or a court.
Typically, when an individual passes away, their will must be approved and their assets appraised through a time-consuming and costly process called probate. Probate may require the payment of back taxes or debts. In a trust, the property can be passed down to new beneficiaries upon the death of a named beneficiary. Therefore, the trust will never die and no probate is required.
A possible disadvantage of a land trust is the false belief that the trust protects the property owners from all liability. Courts have ruled that the property owner, not the trustee, is liable in cases that deal with the direct management of the property.
It is also important to be aware that a land trust does not offer bulletproof privacy. A court may order full disclosure of the property ownership for a number of civil and criminal complaints.
The laws regarding land trusts are complex and vary by jurisdiction. For these reasons, is it very important to consult with an attorney for any land trust issues.
It is essential to have the assistance of an estate lawyer for any land trust issues. Land trust regulations and laws are complex and vary by state. A lawyer can identify and explain the law in your state. They can also help you negotiate the terms of your agreement with a land trust so that your interests are protected. An attorney can also advise you regarding the tax implications of your donation or sale to a land trust.
16 people have successfully posted their cases
