Legal Question in Real Estate Law in California

Re: Land Trust

There is no special animal called a land trust. A trust is a means to gain the benefit of certain attributes of a trust. When property is placed with a trustee in trust, the trustee is legally obligated to manage the property for the benefit of the beneficiaries of the trust and in conformance with the wishes of the trustor as expressed in the trust document. If you have a "real estate business" that consists of the ownership and management of real property, you can utilize a trust as an "estate planning tool" in the large sense of the concept. Whether this is the best approach for you is another matter. All of these types of issues require consultation with and analysis of your goals and wishes by a competent attorney who is comfortable working in these areas of practice.

Before there were corporations, there trusts were used as a means to accumulate capital and vest management in the hands of a few. REIT's (Real Estate Investment Trusts) are still used for this, but not exclusively, because of certain tax considerations. With the advent of Limited Partnerships (LP's), Limited Liability Partnerships (LLP's) and Limited Liability Companies (LLC's), REITs have become less popular.

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Re: Land Trust

I'm not sure what you mean by "land trust," but there are several vehicles, like trusts, family limited partnerships, or limited liability companies, that can hold the property and offer more asset protection than holding the property in your name alone, along with tax and estate planning benefits.

It's hard to recommend one over another without knowing your situation, net worth, taxes, and long/short-term goals for the property, but a consultation with an estate planning attorney should help.

Re: Land Trust

The term 'land trust,' used alone and out of context, is ambiguous and could have any of several meanings.

One very common useage of the term, however, is to identify any of the many trusts set up for the permanent protection of lands for the long-term public benefit. An example is the Sonoma County Land Trust. It is an entity in the form of a trust (as opposed, say, to a corporation or partnership) governed by trustees and holding property according to a 'declaration of trust' for the benefit of the trust beneficiaries, in this case the public.

The SCLT acquires land through private donation of the land itself, through donation of the development rights, and through market purchases of suitable land using both donated funds and tax funds. A portion of our sales tax goes to the trust for acquisition and management of land.

So, it's a conservation tool, designed to preserve land so it won't be developed. Private donees may benefit from donating land by getting a charitable deduction from their taxable income, or a reduction in their assessments and thus their property taxes when they donate the development rights (while retaining the ownership and use for other purposes such as ranching).