Frequently Ask QuestionTHE TRUSTEE
What powers does my trustee have?
The trustee can only act with regard to the title of the property at the written directions of the beneficiary.
If the property is in a Virginia Land Trust, what powers do the beneficiary have?
The beneficiary can rent it; posses it: collect rent; repair it and direct the trustee to sell or option the property.
Should I name a Successor Trustee(s)?
The beneficiary can rent it; posses it: collect rent; repair Yes. Once the Virginia Land Trust has been established the link to the Statute law of Virginia has been achieved, the Trustee can be changed without losing the benefits of that law.it and direct the trustee to sell or option the property.
Can an LLC be a Trustee of a Land Trust?
This will depend on the laws of your state. Virginia law allows an LLC to be a Trustee of Land Trust.
Can a Land Trust have a director(s)?
You do not have to have a director. There are situations in which a director can be convenient. e.g.… if minors are involved.
Can the trust have more than one trustee?
Yes, but you need to document if all trustees must sign or if only one signature is needed. If you are going to allow any one of the trustees to act on behalf of the others, you need to include “jointly and severally” language in your trust agreement.
Is it OK to use the same trustee for all my land trusts?
There are arguments for and against this position. If you have trustworthy financial friends, not in the same state as the property, that understand what the Land Trust is and will stand with you in times of difficulty, then perhaps that could work for you. A professional LLC trustee firm can minimize the effect of multiple entries in the public record and even add a level of intimidation. An added benefit is a LLC does not die or go insane.
When is the trust formed legally and how can property be put into the Trust?
The Trust is formed when the document is created and executed. The Trust is then funded when the property is put into the Trust and the deed into Trust recorded in the public record. Only when the trust is funded is it a valid trust.
Trust formed prior to taking title— If you want to form the trust prior to taking title, you can assign your purchase contract to the trust so that the property is placed into the trust at closing.
Property put into Virginia Land Trust at closing— If you prefer to just wait until closing to make the trust effective or if you already own the property, you can just deed the property directly into the Virginia Land Trust. FYI. You can’t put cash into a land trust, because cash is personal property.
Is it true that land trusts are not legal in my state?
Virginia is one of a very few states that have a specific land trust statute laws.(55-17.1 email us for a free copy) In other states, the land trust is a matter of “contract law”. Unlike many trusts the beneficiary does not hold equitable title but controls the trustee with written direction to act. A land trust is normally a revocable trust which means that the beneficiary can direct the trustee to remove the property from trust.
Does the land trust give me asset protection?
No. You need an overall master strategy for protection of your hard earned assets. The land trust gives you no statutory legal liability protection. The land trust can be an important part of a master plan to keep your property. The land trust can slow down a frivolous lawsuit and add to the costs for the plaintiff. Even losing a lawsuit may not be the tragedy you would think. Ask us about special methods of protecting the asset.
What is the best benefit of using Virginia Land Trust?
Privacy for the beneficiary. This is not perfect. Think of it as a “curtain” not a wall between you and the property. The land trust shields the property from your future personal liability and issues that can cloud title (divorce, insanity, bankruptcy, death, lawsuits, etc) and speeds up future conveyances as a result.
Gifting. You can gift all or part of an interest in a land trust to another party by assignment and approval of the trustee. Gift tax and Unified Credit Law still applies.
Are Federal, state and local judgments against the beneficiary going to attach to the land trust?
Not normally since the beneficiary has no legal or equitable title. A judgment against the trustee individually does not attach to the trust property or the trust.
Should I use a land trust for my personal residence or my parent’s residence?
Many do. There may be some difficulty with homestead in some states. All the benefits of privacy would apply.
Should the trustee be the property manager ?
No. Operational responsibility for the property falls to the beneficiary. The beneficiary would have the ability to direct the Trustee to sign a management agreement with a third party. This decision would depend on your personal goals and the risk the property may present.
Will the trust automatically expire or terminate?
Generally, under common law (your state law my specify otherwise), the trust can not be in effect for more than twenty (20) years due to the rule of perpetuities. If the parties wish, the property may be deeded to the beneficiary or if the trust states the terms of disposing of the property the directions of the trust would be followed. The parties may agree to create a new trust and continue under the terms and conditions of the new trust.