I recently read an article published by the CCIM Institute (a National Commercial Real Estate Organization). The title of the article was Protect Your Assets With a Land Trust. After reading the article, I felt compelled to make some comments. While the article was mostly accurate, there were two points that I disagreed with.
The author stated, “The trustee usually prepares the deeds and assignments of beneficial interests.”
In my 40+ years of forming and administering Land Trusts for myself, it has been a rarity to have the Trustee prepare deeds or assignments. If you use a professional trustee company (e.g., Chicago Title Land Trust Company), they can do this for a fee. Typically, they do not.
Personally, I like using individuals as Trustees, not trustee companies.
In explaining the benefits of using an individual as a Trustee, the author states, “The estate planning trust of a Land Trust Beneficiary holds the Land Trust interest as personal property, and title to the real property is held by the Trustee under that Land Trust.”
While this statement is mostly true, it is not true that the Beneficial Interest in a Land Trust is considered “Personal Property” in all States. In those where it isn’t, more must be done to protect your assets.
For example, under Indiana law, the Beneficiary takes an equitable interest in the trust property. See IND. CODE 30-4-2-7. Therefore, the Beneficiary’s equitable interest IS subject to a judgment lien.
Also, Louisiana does not appear to recognize the designation of the beneficiary’s interest as personalty: St. Charles Land Trust v. St. Armant, 253 La. 243, 217 So.2d 385 (1968). Since the interest under a land trust in Louisiana is considered realty and not personalty, a judgment against the beneficiary WILL attach to the realty.