In Illinois, property owners can use an Illinois Land Trust, which provides title to a trustee while the beneficiary of the land enjoys the rights of owning the property. It can be used in two ways:
An asset protection tool
An estate planning tool
Here we look at client success stories regarding how the Illinois Land Trust was used to resolve their issues.
Galena Property Owner
Our client is a a business owner who was at high risk for liability due to discrimination accusations against his employment placement agency. He owned property in Galena, Illinois and wished to protect his property should a lawsuit transpire. When someone owns property, it can be searched through the county's records very easily. However, with the land trust, the name doesn't appear anywhere providing a level of protection.
Mother and Son
A mother/son team owned property together. They wanted to ensure the property would go to the other in the case of either’s passing, while also including the future wife of the son in the plans. Using a land trust is less costly for estate planning purposes than creating an estate plan. A land trust ranges from $1,200 to $1,500 to draft a personal trust, while probate can cost $8,000 to $10,000.
In the first example, it was all about privacy. The anonymity was required to protect the property owner from potential lawsuits associated with his business. With the Illinois Land Trust, he could protect his property because his name did not appear as the owner so that a county search would not discover his land.
In the second example, the client used the trust as an estate planning tool. The mother was allocating 75% for a property and the son, 25%. However, the son wanted his future wife to go on title with him. The Illinois Land Trust allowed the clients to plan who would be entitled to ownership should one of the owners die. At the same time, if the marriage were to end, the Land Trust would allow the owners to change who gets this property without having to do anything more than paying a fee to the trustee to make the change.
In the case of the mother and son property, the son and his wife were able to plan it out so that they became joint owners of their 25% interest. If they get divorced, the divorce court will decide who gets what part of that interest. Additionally, they can also name the mother as their successor beneficiary since they don’t have children yet, meaning she’d become 100% owner. However, if the couple does have kids, they can change that interest so that it goes to a trustee for the children. And of course, the mother can also name the couple or son as the beneficiary in the case of her death.
For the Galena property, the owner had peace-of-mind knowing that should a lawsuit arise, the ability to search for property--and therefore know that he had assets to go after--was protected. Were he to lose the lawsuit, the property might be available to the judgment creditor, but not being able to find assets in his name could be a deterrent to even bringing suit.
The Minchella & Associates Difference
With over 40 years of experience in Illinois real estate law, Erica Minchella has represented thousands of home sellers and buyers, landlords and commercial and investment property owners. For more information, schedule a consultation today.