4 Things Real Estate Agents Should Know About Land Trusts

Written by Posted On Thursday, 12 December 2019 14:58
4 Things Real Estate Agents Should Know About Land Trusts David McBee on Pexels

A land trust is one method that many people use to help get their affairs in order. Being a realtor and dealing with a land trust means that you need to understand the basic intent of the trust. Here are some of the more pertinent facts that could come into play when you’re dealing with a land trust situation.

Revocability Factors

The good thing about creating a land trust is that it’s revocable as long as the person who established it is still living. Once this person has passed, the land trust becomes irrevocable. What this means is that the terms that were established as a part of the trust will need to be followed. You may decide that this is a good option for you in order to protect your real estate investments. This is another common reason for the establishment of a land trust when multiple parties are partners.

Public Record Considerations

Once a piece of property is placed into a land trust, the trust is listed on the public records. The individuals will be listed in the legal paperwork of the land trust, but will be shielded from having their names on the real estate itself. This can make it more difficult to track down who you need to contact if you want to invest in a land trust. As a real estate agent, you also need to ensure that the correct legal paperwork is presented in order to proceed with the sale process.

Options of Trust

You may be wondering about what is a land trust exactly. How the land trust was established will make a big difference in how it can be purchased or sold. Many people will establish a land trust in order to protect their assets. The trust becomes the legal entity that owns the land and makes the decisions about how to handle it. For example, transferring a land trust to your beneficiaries is another common practice to help keep the land out of probate court after the person is deceased.

Capital Gain Realization

Another reason that can be beneficial to place land into a trust is that your heirs don’t have to pay taxes on it. This is because of the fact that capital gains are calculated from the time that you took possession of the land. What this means is that unless you hold onto the land for a substantial amount of time, you won’t have to pay capital gain taxes on the sale of it.

Land trusts can be complicated for a variety of reasons. Use these tips to get you started on making sense of the process for yourself and your clients. These 4 things will help any real estate agent understand the ins and outs of land trusts.

 

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