Illinois is one of the few states with a long tradition of land trusts, and many Chicago-area homes are held in them. Here is how they work, and what they realistically can and can't do.

What is an Illinois land trust?

In a land trust, a trustee, usually a corporate trust company, holds legal title to the property. You, as beneficiary, keep the right to live in, manage, lease, sell or mortgage the property, and you direct the trustee in writing. Your interest in the trust is treated as personal property rather than real estate. The trust agreement is private and isn't recorded; only the deed to the trustee is.

Benefits

Privacy

The public record shows the trustee as owner, not you. That privacy has limits: Illinois law requires beneficiaries to be disclosed in certain situations, such as code enforcement and some government and court requests, and federal reporting rules can apply to some purchases.

Simpler transfers

Because your beneficial interest is personal property, it can often be assigned without recording a new deed, which can simplify transfers within a family or business.

Avoiding probate

You can name a contingent beneficiary to receive your interest at your death, so the property passes without probate. See probate and estate administration.

Co-owner arrangements

The trust agreement can set out how multiple beneficiaries share decisions, which is useful for relatives or investors owning together.

What a land trust does not do

It isn't strong asset protection on its own. Creditors with a judgment against a beneficiary can generally reach the beneficial interest.
It doesn't reduce property taxes. You remain responsible, and you can still claim the homeowner exemption if you live there.
It doesn't replace an overall estate plan. It works best alongside a will or living trust.

Setting one up

Choose a trustee. Most Chicago-area land trusts use a corporate trustee.
Sign the trust agreement, naming beneficiaries and, ideally, contingent beneficiaries.
Deed the property to the trustee and record the deed.
Check with your lender and insurer. Update the insurance to reflect the new titleholder and confirm how your mortgage treats the transfer.

Final thoughts

A land trust can be a practical tool for privacy, management and passing property to family, as long as you understand its limits. For background reading, see our resource library, or schedule a consultation to see whether a land trust fits your plan.

By Attorney Shara Kamal. General information for Illinois readers; not legal advice for a specific situation.