What Are the Advantages & Disadvantages of L Trusts?

A land trust, sometimes referred to as an L trust, is a legal method of keeping title to a piece of real estate. As with a trust for an estate, a land trust has both a trustee -- a person who administers the trust -- and a beneficiary who owns the property and usually manages it. Placing land into a land trust has several advantages, although it carries several drawbacks, too.

One of the chief benefits of a land trust is that the name of the true owner of the trust does not need to be made public. While the trustee of a particular land trust is a matter of public record, the beneficiary of the land trust -- the true owner of the property -- does not need to be revealed, except if this information is ordered by a judge.

Another main advantage to L trusts is that if the current beneficiary dies, the title of the property will automatically transfer to another party. While a property received in a will has to go through probate court, a property received through a land trust does not. This means there is no delay in transfer, no lawyers are involved and the name of the beneficiary is still kept private.

One of the chief disadvantages of land trusts is that the putative owner of the land -- the beneficiary -- is not allowed to exercise fill control over the administration of the property. Legally, the property is administered by a trustee -- in most cases, a bank or a professional trustee with a trust company. While the trustee usually responds to the wishes of the beneficiary, he must administer the land in accordance with the trust's rules, as set at its establishment.

Another disadvantage of land trusts is they cost money to set up. Not only does a person wishing to start a land trust have to pay a person with legal expertise to draft a proper trust document, but the person must set aside money to pay the trustee to administer the trust. This costs at least several hundred dollars per year.