Land Trust (Illinois Land Trust)


The term land trust refers to an agreement that transfers the title to real estate to a trustee, while the rights to the property are retained by a beneficiary.  Land trusts eliminate many of the complexities associated with the purchase, maintenance, and sale of real estate.


Also known as an Illinois land trust, a land trust is similar in structure to a revocable living trust.  A donor, or donors, provides the assets to the trust, thereby transferring the real estate title to the trustee.  The beneficiary, which is also the donor of the property, retains their rights to the assets as well as control over it.  This mechanism converts real estate into personal property, which is referred to as the beneficial interest in the trust's assets.  Creating a land trust provides the owners of the property with several advantages, including:

  • Privacy: when a land trust is created, the actual owner of the property is not disclosed to the public.  This is desirable when an individual would like to acquire several plots of land for a specific purpose and would like to avoid inquiries as to their intent.
  • Succession:  when a beneficiary passes away, any property held in a land trust is passed to contingent beneficiaries identified in the trust agreement, thereby avoiding probate.
  • Conveyance: since the beneficial interest in the trust is considered personal property, this asset can be used as collateral for loans, negating the need for a title report and other formalities associated with holding real estate.  Mortgaging and selling property held in a trust also avoids the need to gain agreement from all parties when the land is held by multiple individuals.
  • Protection: when real estate is held by more than one person, the title to the property can be encumbered because one of the parties passes away, gets divorced, or has a monetary judgement against them.  Real estate held in a land trust is immune to legal proceedings such as the placement of a lien on the property or other claims.
  • Selling Beneficial Interest: land trusts simplify the transfer of property to another party.  The recording and filing of deeds is bypassed.

Related Terms

pour over trust, investment trust, oral trust, nominee trust