All Colorado trusts represent a legal agreement between the person who forms the trust, called a grantor, the person who manages the trust, the trustee, and the person who benefits from the trust, the beneficiary. When the grantor transfers property to the trust, title to the property is effectively split into two parts: legal title and equitable title. Legal title rests with the trust under the control of the trustee, and equitable title, or the benefit that come from the property, resting with the beneficiary.
In a trust, the grantor, trustee, and beneficiary can be different people or legal entities, but they can also, and this is the interesting part, be the same person. A trust's ability to divide up title and assign different roles, responsibilities, and benefits are what makes trusts a powerful estate planning and asset management tool.
Land trusts are a very powerful anonymity and asset protection tool for those who own real estate. A land trust, unlike a state-regulated corporation, LLC, or limited partnership, is not registered with the state. This means that the owner of a land trust can remain anonymous. In addition, when the beneficiary and trustee of a land trust are LLCs, the land trust can limit the owner's exposure to liability. Using a land trust to hold title to your real estate can help you enjoy anonymity, privacy, and liability protection.
Setting up a land trust, beneficiary LLC, and trustee LLC is not a difficult process, but it is a process that must people cannot do on their own. Our Colorado Land Trust package is priced to provide every land owner, not just wealthy land owners, with the benefits of a land trust.
Our Land Trust Package
We provide our clients with an affordable way to gain the anonymity and asset protection benefits of a land trust. Our $349 land trust package includes:
Colorado Land Trust
We will form a Colorado Land Trust to hold your property, with an LLC as trustee and an LLC as beneficiary. You may choose whether the trust is a single or joint trust with no difference in cost.
Provide Form Quit Claim Deed
Transferring property into a revocable trust is not treated as a sale of the property for tax purposes and because you are still the owner. You will execute a quit claim deed to transfer the property and file the quit claim deed with the County Clerk and Recorder in which the property is located. Because your property may be subject to mortgages, liens, and other particular situations and conditions, we recommend you consult with a title company to make the transfer. We will not transfer the property for you.
If you have more than one Colorado property that could benefit from a Colorado Land Trust, we will prepare a Land Trust for each additional Colorado property for only $150. We recommend forming different beneficiary and trustee LLCs for enhanced asset protection and anonymity for $99 each, but you may choose to use the same LLCs for all of your properties. Please contact us if you have properties in states other than Colorado.
Anonymous Beneficiary LLC +$199 (if needed)
We will form an anonymous Colorado Limited Liability Company to act as Beneficiary for your land trust. We will act as your registered agent, provide you with an operating agreement, allow you to use our address, and supply you with other important documents.
Anonymous Trustee LLC +$199 (if needed)
We will form an anonymous Colorado Limited Liability Company to act as Trustee for your land trust. We will act as your registered agent, provide you with an operating agreement, allow you to use our address, and supply you with other important documents.
What is a Land Trust?
A land trust is a special type of revocable living trust. A revocable living trust is a trust created while you are alive that, as it sounds, is revocable, changeable, or terminable at your direction. So, a land trust is a trust that can be changed, altered, taken back, or terminated while you are alive.
You create a land trust by drafting a trust agreement that names a trustee and beneficiary and then transferring property into the trust by deed and recording the deed at the county clerk and recorder's office.
The deed is the only document that is ever reported with a land trust. The trust agreement is not recorded, and therefore, nobody but you and the trustee will know who the owner and beneficiary of the trust is.
The beneficiary of a land trust can be you, as an individual, or a corporate entity such as an LLC, corporation, or a limited partnership, or even another trust, which would give you even further anonymity, privacy, and protection.
This also applies to the trustee. The trustee can be you as an individual, or a corporate entity such as an LLC, corporation, or a limited partnership, or even another trust. Each of these entities or trusts will have, at the end of the day, you as the owner. Because the beneficial owner of the trust has never changed, only the legal entity which represents your ownership has changed, you are able own, control, and benefit from the property without creating tax consequences, while maintaining anonymity and reducing your exposure to liability.
The Benefits of Holding Real estate in a Land Trust
Holding title to property in a land trust can provide you with several important benefits, including:
Nowadays, anybody with a working laptop or computer can browse the internet and find information regarding your interest in real property. But, for many people who don’t want everyone knowing what they own, privacy is extremely important.
The beauty of a land trust is that no one but you and the trustee will know who owns the trust property, as there is nothing reported publicly that disseminates this information. This provides you with anonymity and privacy that an LLC or other corporate structure cannot provide.
Protection Against Liens
Another significant benefit of a land trust is its ability to provide you with protection from liens against the property. Real estate titled in a trust's name will not be subject to liens against the beneficiary or trustee of the trust.
Protection Against Lawsuits and Judgments
Furthermore, though it may be impossible to render yourself totally impervious to lawsuits and creditor claims, asset protection tools like land trusts make it more difficult and expensive for creditors to reach your assets.
Appointing as trustee an LLC that has been anonymously formed, preferably in another state and out the jurisdiction of the court of the state where the property is located, you will get even more protection against lawsuits and judgments.
No Tax Filings Required
A land trust is not required to have a federal tax ID number, nor is it required to file a tax return. The beneficiary of the trust, whether it be you or a business entity you control, is the taxpayer.
So, when you transfer your property from your own name to the name of a land trust in which you are the beneficiary, there is no change in beneficial ownership, which makes it convenient and easy to use.
Transfer Interest With Relative Ease
You can also change beneficiaries underneath the trust by simply executing an Assignment of Beneficial Interest form. This can easily change the beneficiary from you, to an LLC, or to any other corporate entity you control.
Is a Land Trust Legal in Colorado?
A handful of states have actually created statutes recognizing land trusts, also known as “Illinois Land Trusts”. In these states, notably Illinois and Florida, land trusts have been codified into law.
Unfortunately, Colorado is not one of these states. In Colorado, there is no actual statute governing land trusts. But, this doesn't mean that land trusts are not legal in Colorado.
In fact, support for land trusts in Colorado is implied by case law. What's more, Colorado title companies issue title insurance for and deal with transfers to and from land trusts, which are just a specific type of revocable living trust, on a regular basis.
If you own real estate and are concerned about your privacy or potential lawsuits and creditors, schedule a consultation with out experienced Colorado estate planning attorneys through the contact link on our website.