Family Land Trusts

Does anyone know anything about them.? i would like to find away to allow my family members to keep its farmland, no matter what happens to the family, in today's day and age you can be sued, health bills, or bankruptcy can cost a family the land that's been in there family for generations, and i would like to find a way to minimize the chances of something coming along and taking the land that our long ago relatives bought and paid of with there hard work and sacrifices. ive been looking at a Land Trust, does anyone have any ideas about them or other ways of keep land in the family.?

I suppose technically a trust does not keep land in the family, because the land is owned by the trust (or the trustee  ).  But theoretically it can help keep land from being sold or misused.

And that's virtually 100% of what I know (or think I know) about land trusts. 

Thanks Ludi
in this case all the trustee's would be family i imagine

H Ludi Tyler wrote:
I suppose technically a trust does not keep land in the family, because the land is owned by the trust (or the trustee  ).  But theoretically it can help keep land from being sold or misused.

And that's virtually 100% of what I know (or think I know) about land trusts. 

Trustees being family does not mean that they won't mismanage or misuse that which has been entrusted to their care.  It might minimize the chances if all your family are decent people doing a really good job of raising their own children, but it won't eliminate the possibility.

That said, I'm anxious to see the answers to your question, as well, because I've been wondering about setting up some kind of trust in the event that I'm able to purchase land.  I've seen too much land go out of the family, land my ancestors settled and built farms out of from scratch, including the land my parents homesteaded in Alaska, and land my great-great-grandparents homesteaded in Oregon.  I also have the concern of providing for my handicapped daughter's future in such a way as not to cut off her SSI in the present.  (It's tough for me to work and look after her at the same time, so we live primarily on her SSI.)

Kathleen

I hear you, Kathleen.  My family had large and successful farms on my mother's side, now all gone out of the family as far as I know. 

The Permaculture Design Manual has a hole chapter on setting up your institute or land trust, I believe it was coined as EarthBank back in those days.

They keep to keeping the trustee's in line is by creating a document of trust.  Trustee's are supose to uphold the guidlines of the trust, so if you got an evil cousin let's say who trying to sell the land 5 generation's from now, the rule's of the trust can be so written to kick him out as trustee for doing so.
The only real way your trust can fail is if nobody in the family want's to be a trustee.

In permaculture trust, that's usually when the last line says which trust the asset's and resources will be donated to. 
So it's not bombproof that there's any way to force a family to uphold what you personally want for generation's to come, but you can buttress the land against being a tradable commodity. 

I would rather have a stranger that uphold's the directive's and principles in the document of trust, than a family member who's only interest is what they can get out of it.  As the stranger may love the land and believe in what I believe in, and the family member could drill for oil on the place. 

You kind of have to decide if the Trust is for the Land's sake or the family's sake, cuzz those can be seriously two different document's of trust.

Saybian
Thank you for the information
While i would like to keep the land in the family, i would like to protect it from outside as much as inside threats, I wonder if a Land Trust can protect the land if individuals in that trust get into some sort of financial distress such as medical, by being sued or bankruptcy???
i know system if fool proof but i would like to make it as hard for an outside entity to take it as it can possibly be.

Again thank you for the tip on the book i will see if i can find a copy to look over.

Cyric

SaybianTv wrote:
The Permaculture Design Manual has a hole chapter on setting up your institute or land trust, I believe it was coined as EarthBank back in those days.

They keep to keeping the trustee's in line is by creating a document of trust.  Trustee's are supose to uphold the guidlines of the trust, so if you got an evil cousin let's say who trying to sell the land 5 generation's from now, the rule's of the trust can be so written to kick him out as trustee for doing so.
The only real way your trust can fail is if nobody in the family want's to be a trustee.

In permaculture trust, that's usually when the last line says which trust the asset's and resources will be donated to. 
So it's not bombproof that there's any way to force a family to uphold what you personally want for generation's to come, but you can buttress the land against being a tradable commodity. 

I would rather have a stranger that uphold's the directive's and principles in the document of trust, than a family member who's only interest is what they can get out of it.  As the stranger may love the land and believe in what I believe in, and the family member could drill for oil on the place. 

You kind of have to decide if the Trust is for the Land's sake or the family's sake, cuzz those can be seriously two different document's of trust.

husbands parents put their land and home and everything they owned incl bank accounts into a living trust with my husband as the trustee when they would die..and it made it completely ours when they died, no government interference..

Brenda Groth wrote:
husbands parents put their land and home and everything they owned incl bank accounts into a living trust with my husband as the trustee when they would die..and it made it completely ours when they died, no government interference..

I had suggested something like this to my grandmother, as I thought it would have made things easier when she died (and it would have made things MUCH easier and simpler), but she never got around to it.  So now we are dealing with a bit of a mess.

Kathleen

Are you worried about a scenario in which a non family member trustee like an evil daughter-in law would draw up some clause where she can dictate who abides by the rules of the trust and is allowed on the land and who is not. The kind of thing you'd only expect in a soap opera, but seriously can happen in real life. The land belong's to the Trust, trustee's have a job to run the business of the trust, but they themselves do not dictate the terms of the trust. To oust someone is to prove there not following the trust. The cousin who allow's atv's to tares up the place and dump garbage, cannot be an administrator of the trust.

A land trust can have rules of use of it's asset's and so on, you can give someone a 99 year lease for a $1, you can eject people for violating the trust by adding too many goats. How you get the goat's off is your grand-children's children's problem.

It's something to do with all your asset's while your living, not in the case your dying.

Saybian
Its not so much a matter of family i worry about it is outside entities, Take a scenario where i become very ill and i incur significant medical bills, i would like to find a way to keep the bill collectors or whoever from taking the land that while it is in my name it truly isent mine, it is my entire family's from my great grandparents forward, i view my role as a steward not as an owner really. this also applys to say Bankruptcy or being sued
Im just looking for a way to protect the land as a whole from individuals problems, and none of use ever knows when something catastrophic could occur to bring about this kind of scenario

SaybianTv wrote:
Are you worried about a scenario in which a non family member trustee like an evil daughter-in law would draw up some clause where she can dictate who abides by the rules of the trust and is allowed on the land and who is not. The kind of thing you'd only expect in a soap opera, but seriously can happen in real life. The land belong's to the Trust, trustee's have a job to run the business of the trust, but they themselves do not dictate the terms of the trust. To oust someone is to prove there not following the trust. The cousin who allow's atv's to tares up the place and dump garbage, cannot be an administrator of the trust.

A land trust can have rules of use of it's asset's and so on, you can give someone a 99 year lease for a $1, you can eject people for violating the trust by adding too many goats. How you get the goat's off is your grand-children's children's problem.

It's something to do with all your asset's while your living, not in the case your dying.

I don't know how it works in other countries, but in Portugal they have a thing called an usafruta which means 'use of the fruit' - I think the UK equivalent is an 'usufruct'. 

When my partner and I bought the farm we put it in my young son's name with usafruta to both my partner and myself, which means that we are both entitled to live on the farm and use it as we see fit, but we don't own it.  My son can't sell it, unless we agree to it, but it's already his.  No matter what happens to me or my partner, no-one can force the farm to be sold to pay medical bills or anything else.  Even in the case of him marrying and divorcing, as far as I know the farm is still safe as it's essentially worthless to him during our lifetimes.  When we die, no-one else can stake a claim on it and there are no transfers to be done, as he already owns it.  It will then be up to him to protect the land as he sees fit - maybe by then he will have children of his own and do something similar for them.

Does anyone know if the United States has anything similar to what Burra describes?

Kathleen

Well this is pretty sad, where all here chopping it up on how to go about protecting asset's from individuals and their creditors and there's a stinking Ehow on land trusts.

http://www.ehow.com/how_2104749_create-land-trust.html

Burra's correct and the US has a common-law tradition, like the UK - it will work the same here.

Saybian
While an EHow might provide usful information it is no substitute for personal knowledge was hoping someone had first hand info to share

Tv wrote:
Well this is pretty sad, where all here chopping it up on how to go about protecting asset's from individuals and their creditors and there's a stinking Ehow on land trusts.

http://www.ehow.com/how_2104749_create-land-trust.html

on ours (inlaws) the parents were sole trustees as long as they were able..husband was the next trustee, if he was unable his sister was the next trustee, if she was unable their brother was the next trustee..she died while all 3 trustees were still alive.

MIL had stated who got everything in the body of the living trust, and all other property was to be sold and split equally, which was done.

Be ware of "Land Trust" organizations. Recently I've seen several newspaper articles where they were selling land that had been given to them in trust. They said they had to sell it to maintain a profit to keep the rest of the trusts going. Fact is they need to cut their salaries. Be very sure they're not going to pull a fast one on you.

I have also seen towns sell of land that was given to them in trust. They were supposed to keep it open for public use and they sold it for profit. Bad.

My suggestion is you get a very good lawyer and accountant familiar with this section of the laws and have them set this up privately not having anything to do with land trust agencies.

Kathleen Sanderson wrote:Does anyone know if the United States has anything similar to what Burra describes?

Yes, you just write it into the deed. We had that with the previous owner of our land. He had a lifetime tenancy right to use a forty acre parcel which was where he had been born. He came in the fall and hunted.

Cheers

-Walter
Sugar Mountain Farm
Pastured Pigs, Sheep & Kids
in the mountains of Vermont
Read about our on-farm butcher shop project:
http://SugarMtnFarm.com/butchershop
http://SugarMtnFarm.com/csa

Hay pubwvj
And Everyone intrested
I have managed to find a Attorney in my state who does land trusts as part of estate planing, i'll know more in a month or so, evidently hes the only guy in the whole state who does this type of stuff and travels around alot and only makes it into this area once or twice a month ... So hopefully Soon i can relay some info Evidently this is not a common area of law for attorneys to go into....Ah well

pubwvj wrote:
Yes, you just write it into the deed. We had that with the previous owner of our land. He had a lifetime tenancy right to use a forty acre parcel which was where he had been born. He came in the fall and hunted.

Cheers

-Walter
Sugar Mountain Farm
Pastured Pigs, Sheep & Kids
in the mountains of Vermont
Read about our on-farm butcher shop project:
http://SugarMtnFarm.com/butchershop
http://SugarMtnFarm.com/csa

I have also seen towns sell of land that was given to them in trust. They were supposed to keep it open for public use and they sold it for profit. Bad.

The town I grew up in had a city park, one block square, in a prime location.  A developer had made an offer to swap a larger piece of land he had, plus cash, for that block.  City Council was eager to make millions off of the deal, except for one hold-out member.  He was so upset with the plan, that he was discussing it with his in laws, whose family had been pioneers in the town.  They told him of the original trust, which he managed to locate.  It stated that the city could use the land, as a public park, for as long as they wished.  If they ever decided they did not want to maintain a park there, the land would revert to its original use...an Indian Burial Ground!  End of story!

Does anyone know anything about any Hatfield family land in KY that can be claimed? I've been told my whole life there was same of my families land that could be clamied. So just wondering how or who I contact, if its true.

I am a nurse and work in long term care. I have seen this story pan out many times . If you live long enough you will at one point require extensive health care assistance. No one but the very rich can afford a month in ICU and 6 months in a rehab facility. If your not able to keep a job and insurance because of your debility then Medicare / Medicaid are your only option.
That is if you are in the US. If you have run out of Medicare funds , which you will - then you will have to access Medicaid . At this point you will have to spend down your personal assets to one vehicle , one house with a little land around it , and $1500 in cash. Everything else has to be liquidated before Medicaid will start to pay. If your goal was for your children to inherit the farm , then you will have to had deeded it to them years before . I believe it is 6 years. Otherwise they will take it back from your kids , or at least consider it yours and they will have to liquidate it. They caught on to this along time ago . Dad has Alzheimers but can still sign his name , he is facing 10 years of long term care and hospitalizations , so he signs everything over to the kids . No one gets to leave it behind for the next generation anymore . My advice to you is to build a love for the farm into your kids , give it to them early on , and hope they love you enough to let you stay on it. Hope they love it enough to inspire their kids. Also - eat healthy , exercise , don't smoke and take dope , etc. In other words , don't end up in a nursing home at 60 if you can help it . Make it a goal to live long and die at home.

> live long, die at home..

Amen to that, Wayne.

> estate planning

There are books, etc. Most say to use a lawyer and vet your lawyer carefully. Read the books, do your home work and thought work, then talk to lawyers. From what I have read, the irrevocable trust format is one way to protect assets. Also generation skipping trusts. BUT, if you use a lawyer

[And I believe you should. You can do many legal tasks yourself and save money. I handled probate pro se. But it was a simple probate and I had top notch advice. Do the work you can but get the best advice you can locate, paying as needed, because the law is a haystack of ever changing details and you're talking about something really big and long term here.]

don't tell him how to do the job - tell him what job you want done and what the constraints are. Pay him a fee for a plan, maybe a document, not a percentage for managing anything. Hash over his plan(s) with him and with your counselors. If you don't feel right, pay another lawyer and go it again; maybe starting with your problems with the first plan(s). Note: Creating an legal entity is only the first step; you then most "fund" the entity with the assets you want in it. Two separate steps and the second one is often neglected catastrophically. A WAG on legal costs for something not too complex would be $1500-3000; could be less, I'm basing this on Chicago area. Consider it part of the cost of the land.

A BIG ISSUE is who you're going to saddle w/the responsibility. Long thoughts to think here. Start now and give yourself time. Talk to the "victim(s)", make sure they're on board. Digging a long hole on a hot day may start to sound really like fun... <g>

As Wayne notes, do things early rather than late - I suspect by the time most people here start thinking about this stuff, creditors will likely be able to go back 10 years or more to claim assets. The USA is about out of free inventory (resources available for easy picking - from "others") and many institutions are needing money bad.

Gone through this with my mother. Plan on arranging my own "estate" next fall. Can't be too soon.

Pay attention to this, assuming you own assets you care what happens to when you hit a wall. Nothing is perfect, but there are real choices to be made.


Rufus

Remember in the US if you have a large estate and want to give it to your kids or other friends and relatives, you can give $13,000 to each person per year with no tax effect on anyone. This is important if you want to avoid estate taxes. Portions of the estate can be disbursed over the course of several years to avoid estate taxes, or, if your estate is not large enough to have to worry about estate taxes but you don't expect to need the money yourself, you can disburse it to different people to use for their own purposes with no tax effect. http://www.irs.gov/businesses/small/article/0,,id=108139,00.html

Disclaimer -- not an attorney, seek pro advice. IMO, be careful of companies that claim they'll keep your land safe from creditors by putting your assets into a revocable trust. Those have been quite the rage for a few years. While these trusts may be legit legally and have other benefits, they still don't protect you from creditors. If a creditor is coming after you and you own a revocable trust with assets, the trust is something you own, therefore something they can go after.

Ask an attorney about a possible irrevocable trust (vs. a revocable trust). For those, you irrevocably place the assets into the ownership of all other family members you want to include. If you still want to live on it without worrying about one of your kids getting mad at you and therefore booting you off, see if you can include a lifetime tenancy in the trust. That way if you are sued, you don't own the land and therefore they can't take it from you.

Keep in mind, though, that even your kids who have ownership in the land trust can be sued. And so can corporations that keep people separate from corporations' assets including land. Ask your attorney about spreading out the ownership of the land to as many people as possible, therefore if just one gets sued, only that person's interest could be vulnerable, leaving the rest with the rest of the family to have first rights to buy him/her out. And ask your attorney about umbrella insurance.

There are also situations where land is held in an LLC, which is then held within another entity in a way that sets up layers making it more difficult for creditors to come after. But watch out for "companies" that offer these set-ups also. Go to a legitimate attorney who's been established in a location for a while and who cares very much about his/her reputation. Be a little cautious about "traveling attorneys."

As far as creating an entity whether that be a trust, corporation, LLC, or any other type of entity where the land is perpetually owned by the family while that entity is immune from any type of lawsuit, you may have to lift your land up out of the USA and set it down somewhere in Mexico. Otherwise, see if an authentic attorney can come up with "layers" described above.

Kathleen Sanderson wrote:Does anyone know if the United States has anything similar to what Burra describes?

For the US, the caveats about finding a legit lawyer and learning about estate planning applies. I'm just filling in some details that I know. I am not a lawyer and don't take any of this as legal advice. They are more pointers on how to get educated yourself and why something might be important to learn.

One of the best sources to get educated on law in the US as a non-lawyer is to get the books published by Nolo. These books are written by lawyers and intended for people who are going to DIY it, or get educated enough to be able to talk with a lawyer. Nolo publishes a book on LLCs, C Corps, and estate planning.

The legal instrument typically used to protect someone from creditors is through something called "limited liability". There are several entities that limits liability, of which the LLC is the most flexible for the purposes of limiting liability, paperwork, and taxes. (LLC is an acronym for Limited Liability Company).

The trust could then be set up to own the LLC (or whatever limited liability business entity). The family would control the trust, and as trustees, vote for what happens in the LLC. The LLC would own the land and lease it back to the family. There are probably some requirements for some kind of consideration (like, $1), but these are details where you would talk to a lawyer. There may be a better way to structure this that an estate planner lawyer would know.

This is not foolproof. Limited liability companies are meant to be operated as if they are a separate legal "person", and have some kind of reporting or documentary standards to show that they are being operated with that intent. It is why it is important for LLCs to have their own bank accounts, meetings of members/shareholders are written, and so forth. If it can be shown that you are mixing your personal assets and funds with that of the LLC, a creditor can argue that the people involved are no longer trying to limit liability and therefore should not have limited liability. Once the "corporate veil" has been pierced, creditors can count the assets held in the LLC as if it is your's, and go after it, seize voting shares, force a sale, etc. It also means *someone* has to operate the LLC, even if it is to have some kind of annual meeting to rubberstamp that everything is OK, pay any taxes, pay any annual state fees, etc.

As far as I know, the limited liability does not cover criminal activities.

It seems to me though, that while these legal entities can be set up to go through into the future generations, they are not regenerative in that the "programming" is fixed, does adapt to changing times and circumstances. Laws change slowly, but they do change. LLCs have only been around since 1970s, though the C Corporation and the legal concept of the limited liability has been around for a lot longer, and spread out all over the world.

I think, in addition to setting up the estate like this, you would also have to think about educating future generations not only on how to steward the land and community, but also enough about the law to be able to interface with the rest of a society that may not be built on these values and principles. (The legal concept of limited liability have been used as a tool to abuse public good for centuries).

I used to work for a legaltech startup founded by a bunch of lawyers. Some of them are interested in stuff like this, and may be interested in figuring out a good approach that would for permie families and communities. There may even be lawyers who already figured this out. In the startup and mainstream real estate world, standard contracts had been created to make transactions much easier. Like blueprints, they can still be customized to adjust to particular situations or jurisdictions. Something like this may already be available. I have heard of intentional communities figuring out how to own land as co-ops, so those might be some folks to talk to as well.