Land trusts are chiefly used in Illinois, Florida, Georgia, California, Colorado and several other states, but can be used in any state. The land trust can own any type of real estate, including the family home, but usually it's used only to title investment properties. A bank is normally the trustee. How well the land trust protects the beneficiaries' interest in real estate depends chiefly upon whether the trust contains spendthrift and anti-alienation provisions. As with any entity, the land trust must be properly drafted. As the trust beneficiary you wouldn't directly own the real estate. It would instead be titled to the trustee. You'd own only a beneficial interest in the trust. This is considered personal, not real property. But owning only a beneficial interest in a land trust doesn't, in itself, sufficiently protect you. Your personal creditors can usually seize this beneficial interest. You then need added protection. For this you would title your beneficial interest in the land trust to a limited partnership, LLC or irrevocable trust. You and your spouse can also own the beneficial interest as tenants-by-the-entirety if your state recognizes this form of ownership, and if it would sufficiently protect your interest.
As with LLCs, it's also best to use separate land trusts for each property. One limited partnership or LLC can be the beneficial owner for multiple trusts, though more cautious asset protection attorneys might suggest different LLCs (or different cells) within a Series LLC as the beneficiary of each land trust.
Land trusts are increasingly popular for real estate investors who want anonymity an extra layer of protection, since the property in trust wouldn't be directly connected to them through the public records. Privacy, not asset protection, is then the land trust's major advantage. The beneficial owners' names are not public record because the property is titled to the trustee. As secrecy aids asset protection, the land trust aids secrecy. However, there are two disadvantages with land trusts: First, they are costly to prepare and administer. Second, financing and managing the trust properties are also more cumbersome than properties titled to your own name, which is always a dangerous plan. We use land trusts to a limited extent.