Five Commonly Believed Land Trust Myths Dispelled

A land trust is a legal entity that is designed to protect the land from creditors. It does this by keeping land out of the owner’s name and placing it in the land trust’s name. Real estate investors have used these structures since the late 1800s when investors bought the land up left and right.

Savvy real estate investors created land trusts as an asset protection tool for wealthy landowners who were worried about losing their land due to lawsuits or other factors that could lead to bankruptcy. There are many misconceptions about these entities that people believe are true because they have repeatedly heard them—even though they aren’t based on any facts!

In this article, we will explore five myths about land trusts and dispel them once and for all.

Myth #1: Land trusts are too expensive for real estate investors to use.

This is entirely false. While wealthy landowners have used land trusts in the past, there is no reason why real estate investors can’t use land trusts today. Land trust registration fees are much lower than you might think!

People fail to understand that these trusts are not only for the wealthy landowner—this couldn’t be further from the truth. Anyone can use a land trust to protect their land, no matter how much money they have in assets.

Do you have questions about setting up a land trust? Check out our article about the basics of land trusts. We answer the “how” and “why” of what you need to set one up to protect your assets.

Myth #2: Land trusts are a scam.

Land trusts have been around for over 100 years, and there is no evidence that they are a scam. They cannot be used for fraud or land grabs when land is being purchased. In addition, land trusts work if you buy with a spouse/partner.

Land trusts involving real estate are not always used by landowners alone. Many land trusts involve more than one landowner or even spouses/partners who must own the land together. The belief that only a single person can buy into a land trust is a persistent misconception that stems from the fact that some land trust providers don’t allow multiple names on their forms.

This is easy to get around—write an addendum! Addendums are additional documents that can be used to modify an existing document such as a land trust. For instance, you could add information that would protect against tax liens or judgments in the land trust agreement itself.

There are multiple benefits to leveraging a land trust. We invite you to research those value-added benefits further here.

Myth #3: Land trusts are too tricky to set up.

Many land trust providers have excellent customer service, making it easy to get the land in your name, out of your name, and into a land trust.

An associated misunderstanding is that land trusts must be a specific size—some people believe that if your land doesn’t meet a minimum requirement, land trusts won’t shield it from creditors. That is not true either!

Maybe you have heard that land trust documents require a lot of paperwork and filings—false again! While it does take some time every year or two to update land trust documents, it’s not nearly as strenuous or time-consuming as you might imagine.

Myth #4: Land trusts are only for large land purchases.

This isn’t true! Many land trust providers have an option to choose which parcel of land you want to protect, so it’s possible to register one  on land parcels that range in size from one acre up to thousands of acres.

The misconception is that land trusts are only helpful for wealthy landowners—while the upper class initially created land trusts, anyone can use them today! They offer asset protection to real estate investors who want to keep their land protected from

Moreover, some people think that land trusts don’t protect real estate assets from lawsuits or creditors—this myth stems from the fact that land trusts are not always public knowledge.

As a real estate investor, you can structure land trusts to ensure the landowner’s name is never publicly available. This doesn’t mean land trusts don’t protect the land from lawsuits or creditors—they do!

Do you think that you may need to set up a land trust? Find out if you are eligible and can benefit from setting up a land trust.

Myth #5: Land trusts are only for land.

Another common misconception about land trusts is that they can only protect the land. This isn’t the case at all! You can own almost anything under a land trust today. These structures have become more common in recent years, so the costs have gone down significantly.

Conclusion

In conclusion, land trusts are not scams or land grabs—they’re fundamental, valuable tools that can be used to asset protect your land.  They are not only for the ultra-wealthy but also for real estate investors.

They can help investors to protect the land from creditors, lawsuits, and other land problems. There are many myths about land trusts that can be dispelled with simple research!

Still, have questions? Check out our land trust FAQs for your answers.

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