Land trusts are used for two specific reasons: 1) to keep the identity of a land owner private and 2) to avoid probate when an individual has under $100,000 in probate assets and owns real estate.
When used correctly, the true owner of property will not show up on a title search so potential creditors have a much more difficult time locating real estate. However, the use of a land trust does not protect the owner of a land trust from liability. An owner who wants to minimize his or her liability for real estate in addition to making it difficult to locate must also use the appropriate legal entity (such as a corporation or a limited liability company (LLC)).
Although real estate in a land trust avoids probate, if the land trust is not being used to protect the property, a living trust is usually a better option. Land trusts require yearly fees, as well as additional fees to convey the real estate to beneficiaries, while living trusts do not.
