I recently wrote here about a land-trust case roiling Florida’s real property and trust law landscape for the last several years.  It was against this backdrop that I found the “Young Lawyers Network” column in the January/February 2007 edition of the ABA’s Probate & Property Journal especially interesting.

The column, entitled “The Land Trust”, should be of special interest to Florida lawyers because it does a good job of explaining the unique characteristics of the typical “Illinois Land Trust” and how this form of property ownership is so far removed from classic trust law that calling it a trust can be misleading.  Here’s an excerpt:

The land trust, often referred to as an “Illinois land trust” because of its origins, is truly a unique legal entity.  And, as described by Henry W. Kenoe, the Illinois land trust scholar, it is, perhaps, unfortunate that it bears the the trust moniker  because  the designation is almost too confusing.  The land trust is very versatile and differs from a conventional trust in many ways.

The land trust is a legal arrangement in which a trustee holds legal and equitable title to property, but all managerial powers over the trust assets remain with the beneficiaries of the trust.  The trustee takes action when called upon and directed by the beneficiaries.  A classic definition of the land trust appeared in Robinson v. Chicago Nat’l Bank, 176 N.E.2d 659 (Ill. App. Ct. 1961).

A key benefit of the land trust over the most common type of alternative form of joint ownership, the tenancy-in-common, is that the land trust is not subject to partition actions.  Especially in those cases where a family wants to keep a farm or other large parcel of real property intact when passed to the next generation, the land trust can be ideal (this case is an example of how partition actions can otherwise disrupt the best laid plans).  The column in this month’s Probate & Property Journal goes on to provide the following list of the benefits of holding real property in land trusts:

  • the interest of the beneficiaries will not be disclosed without order of court;
  • the interests are not subject to partition;
  • the beneficial interest is personal property and, therefore, avoids ancillary probate requirements;
  • transferability of beneficial interest is simple;
  • the beneficial interest can be used as collateral; and
  • testamentary dispositions can be set out within the trust agreement, thereby avoiding probate.

By the way, the ABA also has solid Florida-law specific forms available for professionals considering land trusts for their clients.

For more on land trusts (including additional sample forms), Albany Bank and Trust has a comprehensive web-page here dedicated to promoting the virtues of land trusts.