The land trust is an ideal vehicle for anonymous property ownership. It can also provide an easier probate process and potential protection against lawsuits. Setting up a land trust is also a fairly straightforward process, requiring only two main documents: a deed to trustee and the land trust agreement. Land trusts are valid in all states, although the specific laws governing each differ (especially when dealing with California and Florida land trusts). At this point, you may be wondering if there are any reasons NOT to use a land trust. We believe in providing a balanced view of different asset protection and estate planning strategies. To that end, here are three reasons not to use a land trust.Loss of Redemption RightsRedemption rights allow homeowners to reclaim their property before and sometimes even after foreclosure . Homeowners would have to pay off an agreed upon amount, which usually consist of the total debt plus additional costs. This payment must be made within a limited amount of time, in some states homeowners are given 12 months. This valuable right is lost if the property is purchased under a land trust and you are the beneficiary. Loss of Homestead ExemptionsWe already discussed the benefits of homestead exemptions. These exemptions go way back to colonial laws, so while they may differ from state to state their ancient benefits of tax and creditor protection aren’t going anywhere. However, with a land trust homestead exemptions are forfeited. When it comes to assessing property value for taxes, a hefty reduction is lost with disqualification of homestead exemptions. For instance in Florida, homestead exemptions can reduce home property assessment values by $50,000. Loss of Secondary Market LoansAnother detail you should consider when dealing with land trust are financing options. With a land trust, you are disqualified from secondary market loans. The secondary mortgage market is where loans are grouped together and resold to investors. This allows the primary lender to gain back the initial loan amount. Create a Customized Asset Protection PlanYou may already be considering a land trust and all that you have to gain in terms of privacy and protection. However, we hope this article has been helpful in pointing out land trust disadvantages, including the loss of rights and exemptions. Redemption rights can be jeopardized in case of foreclosure. Homestead bankruptcy protection and tax benefits are lost. Lastly, you lose secondary market loan options. My team and I can discuss these potential losses and help structure an estate planning and asset protection plan that is right for you. Call us at 512.757.399 today for a consultation.