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Land Trust vs LLC Asset Protection: In-depth Study (2024)

Max Smith

Reading Time: 7 minutes

Are you seeking a better option for your property’s development and safety? You may have heard of the land trust and LLC facilities on the property. Then, you may start thinking about land trust vs LLC asset protection.

In this article, you will find details about asset protection from both trusts and LLCs. So, let’s go in-depth!

Are you insecure about your asset’s safety? You can save your assets from liabilities and any incidents. Plus, you may also transfer the property to your heir later. 

In this situation, you have two options to choose from. One is a land trust, and the other one is an LLC. 

However, both of these have pros and cons. So they don’t fit everyone in every situation. Besides, land trusts are good at managing estate taxes.

Asset Protection: Land Trust

You can make land trusts. It’s for the safety of your land or real estate properties. If you make a trust, you will transfer ownership to another person or authority who is called a trustee. You have the right, so you’re the grantor. 

Besides, you also mention the beneficiary of the property. It can be your heir, spouse, or anyone you want. The beneficiary will get the property after your death.

Undoubtedly, the trustee will maintain the property and do the necessary task of managing it. For example, collecting rent, maintaining the property, keeping file records, and more. 

Furthermore, in public documents, the owner’s name will be the trustee. So, your identity remains secret.

Moreover, a land trust is removable. So you can change the terms or details at any time. There is no reason for it to take longer to transfer property ownership to your beneficiary. It ensures the safe transfer of ownership to your beneficiaries.

However, a land trust is not so practical for saving your assets from liabilities. If you have debt and have to repay it, then your land trust property will be at risk. Indeed, it does not provide asset safety like an LLC. 

Asset Protection: LLC

Now, let’s talk about the LLC. As the name suggests, it provides limited liability. It’s a business-legal entity. It gives excellent protection to your property. So you don’t need to worry.
But it has formalities to maintain. Plus, there are also annual reports and fees to pay. Moreover, the privacy is not so strong. In public documents, you will find your account and details.

Land trust vs LLC: What to Choose?

So, what do you think about the choice between a land trust and an LLC? Why don’t you combine them? 

Get an LLC and put a land trust in it to get membership interest in your LLC. In this manner, you will be able to protect your assets from any debt and also avoid probate to distribute property to your heir. It’s an ideal option that I highly recommend.

Lastly, the choice is yours; it depends on your situation. If you are buying and will sell your property soon, choosing a land trust can be a good choice.

Pros and Cons of LLC vs Trust

Get some pros and cons of LLC vs trust. It will help you gain a better understanding at a glance.

LLC Pros

LLC Cons

Land Trust Pros

Land Trust Cons

Limited liability

Less privacy


Limited liability

Creditors protection


Avoiding probate



Possible taxes for self-employment


Other assets can be subject to probate

Flexible taxation

Creditor lien avoidance

Privacy protection

Facilitates multiple ownership


Asset protection

Should I Put the Rental Property in a Trust or LLC?

Investing in a rental property is a wise option. But are you concerned with its safety?

Commonly, people choose an LLC or land trust to give their rental property 100% security and take a taste of the extra taxation advantage. But what should you choose?

Let’s find out the answer below.

Make a Trust

Your rental property will give you extra money. It influences both your income and your taxation. Is there a way to save on taxes? 

If you make a trust, it will help to negotiate the state taxes. When you get the rent from your real estate properties, you can put it in the trust funds.

 As a result, the earnings become exempt from taxation. Undoubtedly, it reduces your perceived income to ensure you get more affordable taxation. 

Besides, you don’t need to collect rent. The trustee will manage everything related to the property. Besides, It will save your rental property from a tenant’s claim or misusage.

Furthermore, it will also be helpful for your beneficiary. If you are dead, the trustee will hand over the rental property to your selected beneficiary. 

So, selecting a trust is an excellent option for you. However, there is also an LLC offering you some different advantages.

LLC for Your Rental Property

Suppose you have a business, and its liability can catch your assets like a rental property. So how will you have it? The answer is LLC. 

It’s a formal business entity that saves a property from the risk of liability. So, your rental property will remain only for you and will not be used to repay any debt. It’s the most significant advantage. 

However, you need to maintain some state rules to maintain your LLC. As an LLC is a legal entity, it requires official documents, a registered agent, a license, and more, along with associated fees.

Plus, you can transfer your ownership as per the LLC rule. Do you know how to transfer ownership? Click here to read our article about transferring LLC ownership.

Trust vs. LLC for Rental Property

You get both sides of making a trust and building an LLC for your rental property. Now, what will be better for you? 

It will be best if you get both trust and LLC benefits. So, you will save your rental property from liabilities and also enjoy taxation benefits. 

So you can make an LLC for rental property and put trust in it as a member. In this way, you can gain a combined facility of both trust and LLC in your state.

What Type of Asset is Held in a Land Trust?

Though land trusts are known for taking ownership of real estate properties, they also hold different types of properties. See them below:

  • Plots of land
  • House/home
  • Commercial buildings
  • Mortgages
  • Property notes

Usually, you can use a land trust for property development. You can give your home or commercial land to conservation.

What States Allow Land Trusts?

You can use land trusts in all 50 states of the USA and also in the District of Columbia. In fact, six states have their own land trust laws. The six states are:

  • Indiana, 
  • Virginia
  • South Dakota, 
  • Illinois,
  • Florida, and 
  • Hawaii

The other states follow Illinois Land Trust statutes to set the laws and regulations for land trusts. It does not matter what state you live in or own a property in; you can use a land trust to get its benefits. 

Besides, the number of land trusts is increasing day by day. In fact, Massachusetts has the highest number of land trusts, at 143. Undoubtedly, its benefits are attracting people.

Benefits of a Land Trust

You may know about LLC benefits. But there are also some fantastic benefits to using land trust on your property. Some of them are given below.

  • Making Property Valuable

The Land Trust is well known for land development. They are very good at maintenance and development. 

It does not matter whether it’s land or a house; they will take care of it. Thus, it does not let your property down. In fact, their effort helps to enhance the value.

  • Safe for Beneficiary

After your death, your beneficiaries will get the property interest. The trustee will hand over the property to the beneficiaries. 

If you have multiple beneficiaries, they will get according to the proportion. But yes, they will get their rights. Land trusts guarantee the safe transfer of property to the beneficiaries by any means. 

  • Flexibility in Transferring Names

Do you want to change your beneficiaries’ names? Then do it! In fact, an owner can also be changed in a land trust. There’s no need for public records. It’s a great flexibility to change the owner or beneficiary names in a land trust. 

  • Avoiding Beneficiary Chaos

Are you under pressure to choose only one beneficiary name? Sometimes, you get confused and choose one name for benefit. As a result, your other heirs may be dissatisfied with you. 

In the end, it brings chaos to the family. In a land trust, you can provide multiple names for beneficiaries. 

  • Saves Time and Money 

Land trusts help to avoid probate and the time-consuming procedures of transferring ownership to the beneficiary. It also saves money by avoiding costly systems.

  • Easy to Get Partial Interest 

There is no need to transfer ownership, but recording a deed will transfer partial interest in a property. Make an assignment and get a simple process to dispose of interest. 

  • Minimizes State Requirements

Land trusts can give you state taxation benefits, solve beneficiary disagreements, and keep your property in your family. It can face the state laws and get the best opportunity for you. 

  • Security

On public documents, you can hide your name. A trustee will show its name in public documents as the owner of your property.

  • Rid of Taxation Burden

Trust helps reduce property taxes. Plus, the income comes from the land, and property can also be saved from taxation. 

  • Asset Protection

A land trust saves your property from any lawsuit or claim.


In the end, don’t get into land trust vs LLC asset protection overthinking. Get advice from an expert service provider to understand your situation better and make the right decision.

Frequently Asked Questions

What is a land trust?

An agreement between a grantor and a trustee is called a land trust. It’s a contract that helps to protect property and will transfer ownership to the owner’s successor in the future. A trustee gains control over the promotion on behalf of the actual owner. A land trust is revocable.

What does a land trust do?

A land trust protects your property and also maintains it well to perform development. Plus, it takes on the responsibility to distribute the property to the owner’s heir after the owner’s death.

Should I put my house in a trust or LLC?

You should put your house in an LLC and then take an interest in a trust. As a result, you will enjoy both the benefits of trusts and LLCs. So you will gain asset protection from debts and also get a simple way to transfer ownership to your heir in the future.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.

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